The HUD Office for Fair Housing and Equal Opportunity (FHEO) launched an investigation into the Washington State Housing Finance Commission’s Covenant Homeownership Program under the Fair Housing Act.
The Covenant Homeownership Program offers downpayment and closing cost assistance for first-time homebuyers through a zero-interest, secondary loan on a home mortgage, with an income ceiling at 120% AMI. Borrowers who make 80% AMI or less qualify for complete downpayment assistance loan forgiveness after owning the house for five years. To qualify for the program, applicants must have lived in Washington before April 1968 or have a parent or grandparent of Black, Hispanic, Native American, Alaska Native, Pacific Islander, Korean, or Indian descent who lived in the state at that time. From July 2024 to June 2025, the program served over 500 households and delivered more than $60 million in down payment loans. The average loan amount was $110,000.
HUD alleges that this program violates the Fair Housing Act by discriminating against individuals who do not meet the criteria on the basis of race. The Commission said it would respond to the Office of Fair Housing and Equal Opportunity’s requests for information, and noted the program passed with bipartisan support in 2023 and is only one of a host of other first-time homebuyer and downpayment assistance programs.
Read the full letter notifying the Washington State Housing Finance Commission of HUD’s investigation here.
