Buying a home is a dream for many, but for historically marginalized families—especially Black, Latino, Indigenous, and other communities of color—the path to homeownership can be more difficult. Factors like systemic racism, wage gaps, and the rising cost of living all play a role in making homeownership a distant goal for some. Still, it’s not impossible. With the right approach, saving for a home can become a more attainable dream, even in the face of these challenges.
In this guide, we’ll break down some practical steps and considerations for families who face these systemic barriers. Let’s talk about how you can save for your future home while navigating the realities of your financial situation.
Understanding the Challenges
The first step in creating a realistic savings plan is to acknowledge the challenges that historically marginalized families often face. Homeownership has long been out of reach for many in these communities due to factors like discriminatory lending practices, a history of redlining, and racial wealth gaps. For example, Black and Latino families still face a significant gap in wealth compared to white families, which can make it harder to save for a down payment or qualify for a mortgage.
Additionally, access to good-paying jobs, affordable education, and financial resources are not always equal across racial and ethnic lines. These disparities can add up over time, making it harder to build wealth and save for a home.
So, before diving into a savings plan, it’s important to have a clear understanding of where you are and the specific hurdles you might need to overcome. Knowing your starting point will help you create a more customized and realistic approach to saving.
Setting Up a Realistic Savings Plan
Now that we’ve acknowledged the challenges, let’s talk about how to create a savings plan that works within your current circumstances. A realistic plan takes into account your income, expenses, and goals. The key is to take small steps that build up over time, even if they seem insignificant at first.
Start with Your Budget
The first step in saving for a home is understanding where your money is going each month. Create a budget that tracks your income and expenses. This will help you see where you might be able to cut back or reallocate funds toward saving for a home. Even if you can only save a small amount each month, the key is consistency.
If you don’t already have a budget in place, you can use tools like Mint, YNAB (You Need A Budget), or even a simple spreadsheet to track your spending. After a few months of tracking your expenses, you may realize that small changes—like eating out less or cutting down on subscription services—can free up a bit more money for savings.
Set Realistic Goals
Saving for a down payment is one of the biggest obstacles in buying a home. Traditional down payments range from 3% to 20% of the home’s purchase price, which can add up to tens of thousands of dollars. But don’t let this figure discourage you. There are programs available, especially for first-time homebuyers, that can help reduce this amount or offer assistance.
Look into options like FHA loans or down payment assistance programs that are designed to help families like yours. Many states and cities have programs specifically aimed at supporting historically marginalized families in their journey to homeownership. Even if you qualify for assistance, it’s still important to save as much as you can to minimize the amount you need to borrow.
Automate Your Savings
One of the easiest ways to stick to a savings plan is to automate it. Set up a separate savings account specifically for your home fund, and have a portion of your paycheck automatically transferred into that account. Even if it’s just $25 a week, that money will add up over time. If you’re not able to set aside that much, start with what you can. The important part is to make savings a habit, rather than something you do sporadically.
Leveraging Support Networks and Resources
Saving for a home doesn’t have to be a solo journey. There are resources and support networks available to help you navigate this process, even when it feels overwhelming.
Seek Financial Counseling
If you’re not sure where to begin or how to improve your credit score, consider reaching out to a financial counselor. Many nonprofit organizations offer free or low-cost counseling services that are specifically geared toward helping marginalized communities. They can help you create a savings plan, improve your credit, and give you advice on navigating the homebuying process.
In some cases, these organizations can also help you access special programs for down payment assistance, lower interest rates, or other forms of financial support that can make homeownership more attainable.
Tap Into Community Resources
Many historically marginalized communities have long-standing organizations and initiatives that support homeownership. These groups might offer everything from homebuyer education workshops to financial literacy programs and even access to funding for down payments.
If you’re part of a tight-knit community, don’t hesitate to reach out and ask about local resources or family support programs. Family members and friends can often provide more than just financial assistance—they can offer emotional support and practical advice, too.
Consider Alternative Homeownership Models
In some cases, traditional homeownership might not be the only option. Co-ownership, where multiple families share the cost of a home, or community land trusts, which allow you to buy a home at a lower price with shared ownership of the land, can provide alternative routes to homeownership. These models have been used by historically marginalized families to overcome the high cost of housing.
While these options may not be for everyone, they are worth exploring if traditional homeownership feels out of reach. Local housing advocacy groups may have information on alternative models that could work for your family.