Minority home buyers in Washington state eligible for 'Forgivable Home Loans'

Washington Expands Covenant Homeownership Program to Aid Minority First-Time Homebuyers

SEATTLE — Washington state has broadened its Covenant Homeownership Program, a groundbreaking initiative aimed at addressing historical housing discrimination by providing zero-interest loans to first-time homebuyers from communities impacted by racially restrictive covenants. The program, launched in 2023 and expanded through a 2025 amendment, offers up to $150,000 for down payment and closing costs, with some loans eligible for forgiveness, targeting groups such as Black, Hispanic, Native American, and certain Asian and Pacific Islander communities.

The Covenant Homeownership Program, administered by the Washington State Housing Finance Commission (WSHFC), was established to rectify the legacy of discriminatory practices that barred many minority groups from homeownership before the 1968 Fair Housing Act. Eligible applicants include first-time homebuyers—or those who have not owned a home in the past three years—whose household income is at or below 120% of the area median income (AMI), up from 100% prior to the 2025 amendment (SSHB 1996). Applicants must also provide documentation proving they or their ancestors lived in Washington before April 1968 and belong to one of the qualifying racial or ethnic groups, including Black, Hispanic, Native American, Alaska Native, Native Hawaiian, other Pacific Islander, Korean, or Asian Indian individuals.

Loans under the program, which average around $120,000, carry no interest and are repayable upon the sale or refinance of the home. A significant update in 2025 allows forgiveness of loans after five years for participants enrolled in a special purpose credit program with incomes at or below 80% of the AMI, a provision designed to support lower-income households in building generational wealth. The program is funded by a $100 fee on real estate transactions, generating substantial funds annually, though demand has outpaced available resources, with $34 million disbursed in the program’s first year alone, according to the WSHFC.

“The Covenant Program is a critical step toward addressing the homeownership gap created by decades of discriminatory policies,” said WSHFC Executive Director Steve Walker in a statement to The Seattle Times. “By providing meaningful assistance, we’re helping families access the wealth-building opportunities that were historically denied to them.”

Sources:

• Washington State Housing Finance Commission (wshfc.org)

• The Seattle Times (seattletimes.com)

• KUOW (kuow.org)

• Washington State Standard (washingtonstatestandard.com)

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