The NHC is a consortium of affordable housing stakeholders whose mission it is to “...collaborate through dialogue, advocacy, research, and education to develop equitable solutions that serve our common interest.” According to the organization’s release, the NHC’s new tool, dubbed the 3by30 Mortgage Calculator, allows anyone interested in purchasing a home - or even just curious about how much home they could purchase, given their specific financial parameters - “to assess how much of a mortgage they can afford without ever having to guess how big a down payment they will need.”

According to NHC President and CEO David M. Dworkin, “One of the biggest obstacles to becoming a homeowner is the lack of understanding surrounding down payment requirements. However, the 3by30 Mortgage Calculator successfully addresses this issue by completely eliminating the need for guesswork.” The goal, he says, is “to help close the homeownership gap and make the American Dream of homeownership a reality for over 3 million of our friends and neighbors by 2030.”

Why it’s Important 

According to a survey cited in the NHC’s announcement, significant misconceptions about down payments are rampant among prospective homebuyers of all demographics. When asked what is the minimum down payment required to qualify for a mortgage, 42% of African American respondents said it was more than 20%.” The correct answer? 5% or less. The misconception cut across the board; only 18% of White respondents and 14% of Hispanic respondents answered correctly. 

This information gap matters because it discourages potentially qualified individuals and families from even exploring the possibility of homeownership, causing them to miss out on the opportunity to acquire equity and establish generational wealth. After all, saving up 20% of $300,000 may very well be impossible for many families - but 5%? That’s a very different - and potentially feasible - equation, especially considering the many resources available to help home-seekers come up with that all-important down payment. 

How it Works 

To use the 3by30 Calculator, according to Dworkin, “You start by entering your gross annual income, monthly debts, and the amount you have saved for a down payment. Then, using the Down Payment Resource® website, you can identify available down payment assistance (DPA) in your community.” Every factor in the calculation can be easily adjusted, including important indicators of affordability, such as the housing debt-to-income ratio and the total debt-to-income ratio.

For example, says Dworkin, “In Washington, D.C. alone, there are 15 programs that provide at least $9,000 in DPA. For low-income D.C. residents, the assistance can exceed $100,000. The 3by30 Mortgage Calculator also allows you to estimate your mortgage interest rate, credit score, property taxes, homeowners insurance, and mortgage insurance.” It also takes into account closing costs, which, says Dworkin “is a common stumbling block for first-time homebuyers who may be unaware that closing costs can exceed the down payment itself.”

By default, the calculator uses a 7% interest rate, but Dworkin notes that the default will be updated as mortgage interest rates fluctuate.