Want a low-interest loan and $20K to buy a home in Baltimore? Here’s how.

Maryland government leaders want to give away nearly $4.5 million to Baltimore homebuyers who purchase newly renovated vacant homes.

The money will come in two different forms: A savings initiative that can reduce a homebuyer’s mortgage interest rate to 3.5%, and up to $20,000 in down payment assistance that can be forgiven after five years.

The incentives come as city and state leaders, together with their many civic and philanthropic partners, have joined forces to reduce Baltimore’s vacants. Mayor Brandon Scott, who took office in late 2020, has publicly celebrated the initial signs of progress, which includes a 25% drop in city-designated vacant properties over the last five years.

But as more homes started getting rehabbed, city and state leaders caught wind of a troubling trend: A delay from when a renovation project was completed to when an occupant moved in. Maryland housing secretary Jake Day said the data point spoke to a broader need to make homeownership more enticing.

“This is the kind of incentive we need in every jurisdiction,” Day said Wednesday at an East Baltimore news event.

As a national housing crisis puts homeownership out of reach for more Americans, Day and other government leaders see a unique opportunity in Baltimore’s vacant housing stock to grow the city’s population.

They’ve also pledged to be mindful about gentrification, often pointing to D.C., and its gradual displacement of Black residents as an example of what to avoid.

That means balancing the rehabilitation of some 3,000 city blocks with incentives and subsidies that current residents can use. And some have suggested homeownership as one way to protect more households against a changing real estate market.

“We’re trying to build communities not by just attracting others but giving opportunities to those who live in these same neighborhoods,” said City Councilman Jermaine Jones, an East Baltimore Democrat who spoke at Wednesday’s news event. “Not only are we building strong neighborhoods, but we’re building generational wealth.”

Meanwhile, acting Baltimore housing commissioner Tim Keane, who stepped into the position earlier this year, has pushed the Baltimore Vacants Reinvestment Council to think more comprehensively about creating neighborhoods where people want to live — and making them so well rounded that they’re harder to leave.

Day, on Wednesday, noted how Baltimore’s reinvestment initiative has also made its rental market more attractive to landlords hoping to capitalize on the rising property values. A handful of out-of-state investors, interested in building a successful rental housing portfolio, leaned heavily on relatively risky and loosely regulated commercial loans to grow their footprint. A majority have since defaulted, causing a spike in foreclosure filings.

Many of those foreclosures have landed in the same neighborhoods that city and state leaders have prioritized for investment. That includes swaths of East and West Baltimore, where drooping home values could complicate home renovation and financing efforts.

“We need homeownership outcomes,” Day said, “so we’ve got to incentivize that action.”

The sheer volume of Baltimore’s vacant homes, plus the projected cost of what it will take to revive or demolish them — around $8 billion — means city government and its partners have been forced to think creatively.

They’ve launched new financial tools, taken steps to make existing vacant homes safer and worked with the judiciary system to speed up how long it takes to seize vacant buildings from negligent owners. And they’ve loosened the rules around property donation, allowing people to hand over their homes to the city and wipe away past-due fines.

The down payment assistance, announced Wednesday in East Baltimore’s Johnston Square neighborhood, will be available to at least 150 homebuyers and will be managed by the Neighborhood Housing Services of Baltimore. Borrowers must use the homes as their primary residences and enroll in pre-purchase housing counseling. There are no income restrictions, and it is not limited to first-time homebuyers.

The rate savings program will be provided to about 75 homebuyers and will be administered by Healthy Neighborhoods. Buyers must have credit scores of at least 620; use a Healthy Neighborhoods special purchase mortgage; and take out a loan no more than $375,000. They must also occupy the homes as a primary residence.

The next round of state grant awards for home renovation projects also went public Wednesday. The majority will support the work of community organizations in East and West Baltimore as well as South and Southwest Baltimore, which have the largest concentrations of abandonment and blight.