St. Louis’ development agency, the St. Louis Development Corporation, relaunched its HomeSTL loan program on Tuesday, offering up to $50,000 to first-time homebuyers in the city.
That loan can make the difference in securing a down payment for those who might not otherwise be able to access homeownership in the city, providing a boost to first-time buyers.
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“HomeSTL is designed to help first time purchasers access home ownership; that can include assisting those who are lower-income enter into the housing market for the first time, or give new homeowners a jump start building equity and generational wealth,” SLDC spokesman Deion Broxton tells SLM.
The program ended in 2024 after “overwhelming interest” depleted its initial allocation of funds, SLDC says.
The base loan is $40,000 for up to 10 years at zero interest (the length of the loan can vary), with an extra $10,000 available for those buying in certain qualified census tracts. That loan adds a second mortgage that can cover a portion—or potentially the total—of the “ideal” 20 percent down payment recommended in home mortgages, Broxton says. Some lenders ask buyers to obtain “Private Mortgage Insurance” if home buyers put less than 20 percent down. HomeSTL can help keep people from paying those additional fees.
There are, however, some stipulations. Buyers have to live in the home; can’t have owned, or co-owned, a home in the past three years; meet creditor requirements; and have a household income at or below 80 percent of the area median income (that’s $90,800 for a family of four). Buyers also need to complete an “approved homebuyer education course” and get a loan from an approved lender.
Why It Matters: Many researchers extol the strong benefits of homeownership for building personal wealth. Research from the HOPE Policy Institute, which takes particular interest in equitable policy in the South, noted, “Each additional year of homeownership increases a household’s total net worth by an average of $13,700.” Also, high interest rates can mean slower equity growth for homeowners, they say. Having a major portion of the cost of the loan interest-free helps to ease that burden.
What’s Next: In HomeSTL’s first round in 2024, it closed 47 loans with $2.8 million, leading to $8 million in first mortgages, Broxton says. The SLDC now has another $1 million to pay for 20–25 more first-time home buyers in this latest opening. Both rounds are being paid for by American Rescue Plan Act funds from the federal government.
