In a climate where housing has become less affordable and companies are having trouble getting in-person talent, organizations that help employees pay for their homes might have a competitive edge. That’s the idea behind employer-assisted housing programs and other home-cost-related benefits that some are offering.
“Employers have been using employer-assisted housing benefits for decades, as both a recruiting and retention tool,” says Regan Gross, human resources knowledge advisor for the Society for Human Resource Management. “However, these benefits have evolved in terms of what programs employers are offering and the job level they are offering them to,” she adds.
Here’s what you should know about how some employers are helping employees with their mortgages.
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What Are EAH Programs?
Employer-assisted housing programs are a type of benefit that employers can offer prospective hires and current employees. These programs provide down payment assistance and help with closing costs for employees who want to buy a home.
Assistance is usually in the form of a forgivable loan, meaning that homebuyers who remain employed for a certain period of time do not have to repay the loan.
In some areas, state and local governments and community groups partner with companies to offer matching funds that provide down payment assistance to employees. These programs tend to be popular with employers that require on-site workers, such as health care facilities and colleges. Some examples:
— In Philadelphia, the Home.Buy.Now program matches up to $4,000 of a participating employer’s contribution, which can mean a total of $8,000 in housing assistance to an employee.
— The Live Near Your Work program in St. Louis provides Washington University and BJC HealthCare employees up to $12,500 in forgivable loans to help with the purchase of a home in select neighborhoods.
Other companies and organizations are ramping up previously offered housing benefits. For example, the University of Chicago’s Employer-Assisted Housing Program was revived in 2023 after pausing during the COVID-19 pandemic. In the latest program iteration, the university acts as a second lien holder on mortgages and offers grants of up to $20,000 for homes purchased in one of the university’s nine designated neighborhoods. Employees can also use this benefit in conjunction with other homebuyer assistance programs.
[Read: Best Mortgage Refinance Lenders.]
Why Employer-Assisted Housing Is In
According to the National Association of Home Builders, in the last quarter of 2023, just 37.7% of new and existing homes sold were affordable to families earning the U.S. median income of $96,300 — which is the lowest level since the NAHB began tracking this data in 2012.
At the same time, employers have been challenged with getting their workforce to come back in person since the pandemic shifted people to remote and hybrid schedules. A 2023 survey by The Conference Board found that 73% of organizations surveyed reported as such; as a result, 68% are trying out new talent strategies to increase on-site work.
In another survey by JW Surety Bonds, 1 in 4 employers are considering offering housing benefits to employees in 2024; and those already doing so plan to offer an average of $6,201 in assistance per employee.
“Now that housing costs have increased, it’s creating other variables and other scenarios that were not as important when there was a 3% interest rate,” says Phil Crescenzo Jr., division manager at Nation One Mortgage.
Creative employers now have a choice: Paying higher wages to meet increased and often unpredictable costs of living, or assessing whether it makes more sense for their particular business to provide housing assistance, says Gross. In addition, among employers that have primarily focused on paying for executive-level employees to relocate, more might decide to shift their resources to build on-site housing for employees.
Large Companies Building Affordable Housing
In addition to down payment and closing assistance, major companies are also showing a commitment to building affordable housing in their major operating hubs — and some are even building whole towns, complete with infrastructure, transportation and amenities.
Tech giants are leading the way with such initiatives. For example:
— Amazon committed $2 billion into its Housing Equity Fund, which provides below-market loans and grants to create 12,500 affordable homes in its “hometown communities,” which include Puget Sound region, Washington; Arlington, Virginia, and Washington, D.C.; and Nashville, Tennessee.
— Apple made a $2.5 billion commitment in 2019 to address California’s housing crisis, including a $1 billion first-time-homebuyer mortgage assistance fund. The program is a partnership with CalHFA, focused on helping low- and moderate-income first-time homebuyers, the majority of whom identify as Hispanic, Black, Asian, Pacific Islander or American Indian. Teachers, veterans, and firefighters are also eligible for additional benefits.
— Tesla CEO Elon Musk is reportedly building an entire town in the Austin, Texas, area where his Tesla employees can live and work in affordable housing. “It’s always significantly more expensive to live in California than Texas,” says Crescenzo. “Now if you combine higher interest rates plus higher sales prices, if you’re Elon Musk, you can pay someone’s mortgage for a year as part of your compensation package.”
How to Take Advantage of Employer Housing Assistance
If you work for or are targeting a position with an organization that offers some sort of employer housing assistance, it’s imperative to note that such programs typically have eligibility requirements and conditions.
“First, look into the conditions of the employment,” says Crescenzo. For instance, do you have to work for a certain period of time for the loan to be fully forgivable? “That could be important as it could create some kind of payback situation if you start a job that doesn’t work out.”
In some cases, there might also be income requirements, as many programs are designed to help lower- to middle-income homebuyers. You will usually also have to buy a home in a designated community.
As with any down payment assistance program or homebuying grant, it’s always a good idea to work with a mortgage professional who is familiar with the program and can help guide you through the application process. If the program happens to be through your employer, there should also be a point of contact who can help you navigate the process and get set up to use the benefit.
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EAH Programs: How an Employer Can Help You Buy a Home originally appeared on usnews.com
