Employers Begin Offering Home-Buying Support Benefits



Amazon is doing it. Walmart is too. So is the federal government. These large employers, among others, are helping their workers to purchase homes by offering employer-assisted housing programs (EAHPs), which provide financial assistance through grants, loans, down payments, security deposits, along with homeownership education and counseling.

Will small to midsize companies follow their lead?

Housing Situation Is Grim

In January 2022, Pew Research reported that about half of Americans (49 percent) say the availability of affordable housing in their local community is a major problem, up 10 percentage points from early 2018. Women are feeling the pinch more than men, and younger people more than older.

Those in major urban markets are being particularly pinched. In October, CNBC reported that there are only four U.S. cities where the average American can afford a starter home: Detroit; Memphis, Tenn.; Oklahoma City; and Tulsa, Okla.

Another challenge to affordable housing is that mortgage rates in the U.S. recently climbed above 7 percent for the first time in 20 years, as the Federal Reserve raises interest rates to bring inflation under control. Although mortgage rates then dipped slightly below that peak, home buyers should not expect significant declines anytime soon, MoneyWise reported.

Why Employers Should Care

A few years ago Housing Matters, an Urban Institute Initiative, shared four reasons why employers should care about housing:

• Business location. Housing costs affect where employers can locate their companies.
  

• Workforce diversity. Available and affordable housing allows employers to attract and retain a diverse pool of employees.
  

• Worker productivity. Access to affordable and stable housing can make workers more productive.
  

• Reasonable commutes. Affordable housing options improve job access.

Now, with skyrocketing costs and housing shortages, there's even more reason for employers to consider how adding housing assistance to their benefits could be an attractive option for employees—and a way to help them attract talent in an increasingly tight labor market.

Homeownership Assistance: Case in Point

One company that has launched an EAHP is Dallas Area Habitat for Humanity, a nonprofit that organizes volunteers to help build homes for people in need.

For its own employees, Dallas Habitat has established a benefit that provides down payment and closing cost assistance of up to $13,000 in the form of a loan that is forgivable over a five-year term. Loans are available to full- and part-time employees who purchase a home after July 1, 2022.

"We implemented this program for many reasons, but at the core, it's about removing barriers to support our employees in achieving their dream of homeownership, just as they do in their work for Habitat families every day," said Blaine Cowart, vice president of homeowner services with the group.

The program also was designed to "drive talent recruitment and retention amidst the competitive labor market we are facing in Dallas and across the country," she said.

In addition, Dallas Habitat will partner with other local employers to support their employees with building financial capability, attaining mortgage readiness and accessing homeownership affordably, she noted.

"We see this growing immensely as an option for other employers with the harsh realities that we face today," Cowart said. She hopes other employers will see the benefits and the potential impact that increased access to affordable housing can have for their employees, their communities and their companies.

Not Mainstream—Yet

Jay Kirschbaum, benefits compliance director and senior vice president at World Insurance Associates, said he hasn't seen housing assistance being offered broadly at this point, although government employers are more likely to do so than private companies.

Washington, D.C.'s EAHP, for instance, offers eligible District government employees a deferred, 0 percent interest loan and a matching funds grant for down payment, along with closing costs to purchase their first single-family home, condominium or cooperative unit in the District.

Private employers, Kirschbaum said, are more likely to offer this aid as a temporary option for employees recovering from an emergency, "like we just had with Hurricane Ian, for instance."

For temporary housing needs, employers can use Internal Revenue Code Section 139 qualified disaster mitigation payments to assist directly, in which case these payments are excluded from the recipient's taxable income (while housing assistance not considered disaster relief is fully taxable), he explained.

Housing benefits, however, may begin to be offered more broadly in the private sector, he noted, "especially as housing costs in many areas around the country continue to rise, and employers need to hire employees in entry-level or front-line roles whose salaries may not be keeping pace with these rising costs."

Help with Mortgages Mortgage benefit programs are another kind of homeownership benefit. Participating employers contract with banks or mortgage companies to provide their workers with assistance through the loan process. The financial company gets new customers, and in return provides those customers—your employees—with a closing cost credit of $500 or more, along with other discounts.

Tailoring Benefits for the Workforce

When Kirschbaum has seen employer-provided housing assistance benefits outside of disaster relief, they tend to be in the form of forgivable loans used to assist with down payments that are structured to be forgiven over time.

As the employee's tenure with the organization continues, more of the loan is forgiven, he said.

Employers have flexibility in structuring these benefits, he explained, since they're not governed by the Employee Retirement Income Security Act (ERISA).

"There is no one set of rules that will apply to employers generally," Kirschbaum said. "Employers should feel free to structure the program in the way that will be most favorable to their employees—and, by extension, to the employers."

They can, and should, work with employees, he added, "to see whether a direct grant, forgivable loan, maybe direct employer-provided living quarters or some other option would work best for the employees."