10.8.20
A new research piece by the Kroll Bond Rating Agency (KBRA) found that a hypothetical down payment assistance grant for mortgages could have many benefits for the market including better performing loans, lower risk-based pricing, and decreasing the racial homeownership gap. Within the piece, KBRA analyzed three baseline loan options and showed the Loan to Value (LTV) ratio and interest savings in cases where there was no payment assistance grant, a 50% grant, and a 100% grant. For each loan analyzed, they found that the level of grant provided would lower the LTV between 9% to 20%, and increase homeowners’ savings anywhere from $6,000 – $16,000 annually. KBRA notes that while these interest savings may be small for some, low-income homeowners could see a major benefit.