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Up until a few months ago, Justin Murchison had no plans to buy a home—anytime soon, that is. Like many millennials, the 29-year-old was renting a home in Aurora with a couple of roommates. As a single, Black man who is “not making close to a million dollars,” as Murchison puts it, buying a home seemed inconceivable. Until the Dearfield Fund for Black Wealth stepped in.
Founded by Gary Community Ventures, a Denver-based philanthropic organization, the Dearfield Fund aims to help Black families and individuals buy a home in Denver’s frenzied real estate market. The fund, which was launched in September of 2021, has already helped more than 40 homebuyers purchase a home by giving each as much as $40,000 in down payment assistance. Gary Community Ventures aims to serve more than 450 homebuyers over the next three to five years, and has a 10-year goal to serve 1,000 Black families in Denver.
The Dearfield Fund could be a step in the right direction after years of systemic racism within the real estate landscape. According to the U.S. Census, only 43 percent of Black Americans owned a home by the end of 2021, compared to 74 percent of white Americans. That discrepancy, according to a 2021 study from the Brookings Institution, has its roots in white supremacist practices: Black individuals are more likely to experience discriminatory lending practices, for example, and homes in predominantly Black neighborhoods are more likely to be devalued.
Individual prejudices play a role, too. In 2020, a biracial Denver couple says they faced discrimination when an appraisal company valued their home. When Lorenzo Mitchell, a Black man, was home, the company valued the home at $405,000. When his wife, who is white, stayed home, a different appraisal company valued their home at $550,000.
Often, though, simple access to resources keeps potential homebuyers from finding success in the market. Monica Askew, a Denver-based real estate broker, says that many Black families are able to secure a loan and pay their mortgage, but struggle to find the funds for a down payment, whether that be due to the racial wealth gap or sky-high rent prices.
“What I’m seeing a lot of today, and particularly for people in my community, is that they don’t have upfront money,” says Askew, who is Black. “Sometimes they only need a few thousand dollars to secure a home.”
That’s where the Dearfield Fund comes in. Prospective homeowners may apply for up to $40,000 in down payment assistance, as long as they fit the criteria: They must be first-time buyers, complete a first-time homebuyer course through their lenders, qualify for a conventional mortgage loan with either FirstBank or Elevations Credit Union, and have saved at least three percent of the home value in the range they are looking to buy. Furthermore, their income must be less than 140 percent of the Denver median income (so, because the city’s median income is $43,000 for an individual, the applicant must make less than $103,000, i.e. 140 percent). Gary Community Ventures does not decide how much assistance each family gets. Each family that qualifies will receive the amount of assistance they requested, up to $40,000.
Leadership at Gary Community Ventures believes that initial infusion of cash will ensure qualifying families aren’t held back from owning a home by the racial wealth gap一and then forced into a nasty cycle. “We’ve listened to many Black families who have said that one of the main things standing between them and building wealth is owning a home,” says Santosh Ramdoss, vice president of impact investing at Gary Community Ventures.
The idea that owning a home can help build wealth isn’t a new one. In fact, Gary Community Venture’s fund takes its name from the historic town of Dearfield, Colorado, which was founded by Denver businessman Oliver Toussaint Jackson. In 1910, Jackson officially launched the community with a goal of encouraging Black and African American families to own property and build wealth.
Jackson had the right idea: Research has shown that owning a home is a crucial step in building wealth, especially for lower income households. In Colorado, people of color face higher levels of poverty overall than white residents. A 2019 study by the Bell Policy Center, a Denver-based nonprofit, shows that in 2017, around 25 percent of Black Coloradans were experiencing poverty, compared to 10 percent of white Coloradans.
Living below the poverty line obviously makes scraping together a down payment difficult. That’s an especially tall hurdle in Denver’s real estate market, where wealthier buyers are able to put down substantial sums of money in order to secure a home, essentially driving out buyers who don’t have the cash.
Gary Community Ventures heard as much during a series of formal listening groups with multiple Black families. There, multiple individuals mentioned that putting together a down payment is the biggest barrier to buying a home. Gary Community Ventures additionally convened an advisory committee made up of local Black leaders to guide them in the process of setting up and launching the fund.
The Dearfield Fund is not a grant program. Rather, it provides down payment assistance that must be repaid (along with five percent of the home’s appreciated value) in either 15 years, or after a recipient sells or refinances their home—whichever comes first. Should families need more time, they may seek an extension. Ramdoss believes that if a family owns a home for 15 years, they will be able to either sell the house at a profit, or they will have been able to build wealth, save money, and eventually be able to pay the assistance back.
Askew, the Denver realtor, believes that 15 years is more than enough time to save up the money to pay back the assistance, especially if a family no longer has to worry about rent prices.
“A lot of down payment assistance programs work this way,” Askew says. “I’ve found it to be beneficial for most homebuyers. So many people I work with are completely able to qualify for a mortgage, but they just don’t have that money saved. I honestly think that the Dearfield Fund seems like a great opportunity for buyers of color to start building that wealth.”
While a similar plan on the federal level has received some criticism, including that it might help people secure a home they can’t ultimately afford the mortgage for, Murchison says the Dearfield Fund put him in a good position.
“I find it completely doable to pay back [the money], especially with the way Denver’s housing market is,” Murchison says. “This fund is helping me build wealth. If I eventually decide to sell my house, I’ll have more than enough to pay the down payment back. Plus, not paying rent just means more money that can go towards my savings.”
Today, Murchison owns the same house he used to rent. According to him, it was fate that he came across the fund. “I can’t say enough good things about the Dearfield Fund,” Murchison says. “They helped me accomplish something I never thought I would.”