Does homeownership seem out of reach? Help is available for low-income Delaware residents.

Buying a home in Delaware seems out of reach for many residents.

With rents skyrocketing, finding an affordable place to live in the communities many have long called home seems more challenging than ever.

Pandemic financial woes combined with a hot real estate market fueled by a steady flow of newcomers compound Delaware's housing affordability crisis. Many people simply do not make enough money to afford adequate housing in Delaware.

How much is enough money? The federal Housing and Urban Development agency says you should not be spending more than 30% of your income on housing costs and utilities.

Statewide, annual household incomes range from about $45,000 to $66,000 depending on your race and ethnicity, according to a JPMorgan Chase and Prosperity Now report.

In Wilmington, the contrasts were even more pronounced. In Delaware's largest city, Black people make up 56% of the population and have a household income of less than half that of white residents.

To be affordable to those making the median household income, rents in Wilmington would have to be around $785 per month and $1,121 statewide. Last year, it was reported that Delaware’s average rent for a one-bedroom apartment jumped 12.3% to $1,142.

"You're either buying your own home or you're buying your landlord's home," said Kimberly Broomer, a real estate consultant and property owner.

But even if homeownership seems out of reach, there are steps you can make to move in that direction, Broomer said.

For those that qualify as low-to-moderate income homebuyers, here are a few solutions and opportunities that may help with affording the purchase of a home:

On-time rent/utility payments can help

Even as a landlord, Broomer said she encourages all renters to look for ways to become homeowners. One suggestion Broomer had for renters was to ask their landlord to report on-time payments to the credit bureaus.

Experian, a major credit bureau, has allowed on-time payments of bills including phone, utility and streaming services to be used as a factor in a person's creditworthiness since 2019. In September, the credit reporting agency announced they would also allow rent payments to be reported.

TOO HIGH:Paying more in rent? You're not alone. Rents in Delaware jumped the most of any state.

This past October, the Federal Housing Administration told lenders that they would be able to factor verifiable on-time rent payments in underwriting decisions for federal home loans.

Under this program borrowers would need:

• $300 minimum rent

• 12 months of rent payments

• a 620 credit score

• bank statements showing rent payment

Payments via Venmo, PayPal or Zelle are acceptable as long they appear in the payment history of the applicant's bank account statement.

Get a real estate agent

Many renters think they need thousands of dollars to purchase a home. The challenges to save enough to acquire that sum discourage many and perpetuates families remaining renters. Having a real estate agent who is knowledgeable about available resources for low and average-income prospective homebuyers in Delaware can be game-changing.

Octavia Samuels, a real estate agent for 16 years, said she begins her clients' home-buying journey by learning about their lifestyle, needs, and current finances so she can connect them with a loan officer who is best equipped to address the client's position.

Many of her clients are people struggling to pay rent with little ability to save.

"I do understand that they still have a family to take care of [and] they have bills that they have to pay monthly until they're able to buy their house," Samuels said.

She can direct her clients to lenders and programs that would allow them to purchase a home to begin building financial security. "There's so many programs out there that I know about," Samuels said.

Buy a home with a low credit score and less than $1,000 down

A director on the New Castle County Board of Realtors, Samuels said she is passionate about finding ways to help people purchase a home, even if renters have very little money upfront.

"I never want to discourage a buyer if they don't have $3-$4,000 in the bank," she said.

There are FHA loans available for homebuyers with a FICO score between 500 and 579, but the borrower would need to put down at least 10% and there'd need to be at least three years since any foreclosure. Samuels said that with a FICO score of 580, prospective buyers could qualify for a standard FHA loan and would only need to bring a minimum of 3.5% down payment.

Not having money for a good faith deposit, down payment, and closing expenses is not a problem because there are many programs in Delaware that can assist, she said. Samuels said as a real estate professional, she works with lenders who can direct her clients to grants and funding sources that will cover much of the costs of purchasing a home including the down payment. And if an expense is not covered, she can negotiate their payment.

Using renovation loans to buy a fixer-upper

With Delaware's anemic housing stock, there aren't many homes that are move-in ready. Samuels said it sometimes makes sense for a buyer to purchase a house in disrepair that is priced below market value and fix it.

The FHA offers two loans under its 203(k) loan program — limited and standard. Both loans allow low-to-average-income buyers to purchase a home and complete repairs or rehabilitation with a single mortgage. Samuels said that even after the rehab costs have been factored in, many homes are still affordable.

Samuels said she loves this loan for her low-income clients because provided that the property is purchased well below market rate, the 203(k) loan gives buyers the opportunity to buy a house, construct the home with their preferences, and maybe gain instant equity.

The FHA offers several other similarly designed loans to allow low-to-average-income buyers to roll renovation expenses into the primary home loan. They include:

• Freddie Mac CHOICERenovation and CHOICEReno eXPress loans - allows the purchase of "luxury" items, i.e., swimming pool

• USDA renovation loan - allows zero down payment mortgages for homebuyers in USDA-designated rural areas

• VA renovation loan - military servicemembers and their families can buy a home in need of repair or refinance their existing home

$100,000 houses available in Wilmington

Wilmington has an excess of vacant or abandoned houses that are in poor shape due to decades of disinvestment. Many renters are not in a position to take on the challenges of a fixer-upper or afford the costs even after an FHA rehab loan.

Stand By Me — a partnership between the state of Delaware and the United Way of Delaware — works to help put renters and low-income people in a position to buy a home. But Sarah Cha Cha, the Stand By Me Home Program Manager said despite their good credit and healthy spending habits, many clients simply don't make enough money to afford the homes currently on the market.

Cha Cha said the majority of Stand By Me program participants make $42,000 or less.

That's where affordable housing developer, Cinnaire Solutions stepped in. The non-profit has pledged to purchase and repair dilapidated homes in Wilmington, or build new ones. The homes will be energy-efficient, come with the promise of luxury finishes, and be move-in ready for qualified low-income buyers.

The program is called My New Wilmington Home.

When searching inventory, renters should not be discouraged by the home's list price. The goal of the program is to make them available to low-to-moderate income homebuyers for around $100,000.

Azeez Weeks, Cinnaire Solutions Mid Atlantic Development Manager explained that the retail price of homes for sale under My New Wilmington Home are subsidized using state, federal and philanthropic corporate funding sources — allowing homebuyers the ability to purchase the home for around $100,000.

Cha Cha said this program will help close the affordability gap for many Stand By Me participants. Stand By Me is working with Cinnaire Solutions to identify applicants who are "mortgage ready."

The costs involved in making these homes affordable have delayed the progress of their construction, but Weeks said the first homes should be available by early next summer.

For now, Cinnaire Solutions is working exclusively in Wilmington to develop $100,000 homes but there are plans to expand the program throughout the state.

Future funding of affordable housing projects

Delaware's housing crisis seems daunting but there are already projects in the pipeline providing future relief. In Congress's recently passed appropriations bill, Delaware will see over $19 million for projects that offer affordable housing. Some of those projects include:

• RESTORE: Real Estate Strategy to Obtain Racial Equity, $6.8 million − This project will purchase five blighted properties in the Riverside neighborhood of Wilmington and redevelop two of the five into a fresh food market and a Town Green – a central public space within the Riverside community. The remaining three properties will be redeveloped in the future. Recipient: REACH Riverside Development Corporation

• Affordable Housing Development in New Castle County, $4.5 million − This project will support the construction of 20 affordable homes in Newark and 13 affordable homes in Wilmington for low-income families to purchase, as well as the demolition of three homes in Wilmington to make space for future affordable housing development. Recipient: Habitat for Humanity of New Castle County

• Affordable Homeownership, $600,000 − This project will construct 8 affordable home-owner-occupied homes in Kent County. Recipient: Central Delaware Habitat for Humanity

• Strategic Land Acquisition Project, $600,000 The purpose of this project is to acquire building lots for affordable homeownership opportunities throughout Sussex County, Delaware. Recipient: Sussex County Habitat for Humanity

• The Lower Hilltop Equitable Housing Initiative, $3 million − This project would acquire 45 units of housing, stabilize 25 deteriorating units, create 15 green spaces, and clean 15 alleyways in Wilmington. Once units are acquired or rehabbed, they will be sold to developers with an enforceable agreement that the developer must sell or rent them to low-income individuals. Recipient: Wilmington Neighborhood Conservancy Land Bank

• Villa Maria at the Brandywine, $3 million − This project would support the development of 74 units of one-bedroom affordable senior housing for low- and very low-income seniors in the Old Brandywine Village area in Wilmington. Recipient: Ministry of Caring, Inc.

• Lombard Street Redevelopment Project, $750,000 − This project would redevelop a vacant church in Wilmington into a 5-unit affordable apartment complex. Recipient: Central Baptist Development Corporation

Contact reporter Anitra Johnson at ajohnson@delawareonline.com or 302-379-5786 with tips and story ideas. Follow her on Facebook.

This article originally appeared on Delaware News Journal: Delaware affordable housing hard to find. Where to get help.