Student loans kept her from buying a home. A pilot program in Philadelphia made it happen.

In 2020, Shirda Hudson found her dreams colliding. She had taken out student loans to set herself up for success. But now a housing counselor was telling her those loans meant she had too much debt and not enough income to become a homeowner like she’d always wanted for herself and her family.

It had taken a leap of faith to even get to that conversation. A couple years before, Hudson had gone to home-buying workshops, “but I never thought it was something I could do,” she said.

The confirmation of her fears left her discouraged and resigned.

“I thought, ‘Whatever, I’ll just rent and be fine. A lot of people rent,’” said Hudson, 36, who works for the U.S. Treasury Department.

But this fall, the Urban League of Philadelphia contacted her about a new program that’s meant to help Philadelphians buy their first homes and pay down their student loans.

» READ MORE: This new home buyer assistance program accepts Philadelphians without credit scores and can help pay off student loans

Up-front costs (usually at least about 10% of a home’s price) and debts can be major obstacles for first-time home buyers. A host of established grant and loan programs help aspiring homeowners with down payments and closing costs, but help with student loans is something new. The Pennsylvania Housing Finance Agency has been testing this approach in Philadelphia and Pittsburgh through its Revitalizing Neighborhoods and Increasing Homeownership pilot program.

The agency launched the program in Philadelphia in October. Since then, renters like Hudson have been going through the required housing counseling, and buying homes using grants and loans.

Hudson’s $25,000 home-buying grant included $14,000 toward student loans. Last month, she and her husband, Darnell, moved into the four-bedroom, two-bathroom rowhouse in Olney that they — along with their 11-year-old and two children in college — can now call home. They have a finished basement, a porch, and a backyard where their Pomchi puppy Thor can run around.

Hudson has loved seeing her children excited about the new house and knowing that she can pass generational wealth on to them. She’s also inspired her younger sister and a cousin to consider homeownership following a bad experience in the family. Last year, a real estate agent scammed an aunt out of her deposit.

Hudson said she wants to renovate her property and make it “homey” — “do the things we couldn’t do when we were renting.”

“I set this goal,” she said, “and I actually achieved it.”

» READ MORE: How to get a first-time home-buyer grant in the Philly region

The Urban League of Philadelphia, Hispanic Association of Contractors and Enterprises (HACE), and Congreso de Latinos Unidos are helping Philadelphians such as Hudson participate in the program as part of their goal of helping 5,000 Philadelphia households of color become homeowners.

“If down payment and closing costs and student loans are preventing and affecting their ability to access a mortgage to buy a house, they need to know that there are programs like RNIH that are out there,” said Abraham Reyes Pardo, vice president of housing and diversion services at the Urban League of Philadelphia.

The program offers favorable mortgage terms; loans of up to 5% of a home’s price, which are forgivable over 10 years; and grants of up to $25,000.

“As far as money to get in, this really does solve a major issue for many people,” said mortgage banker Patrick Lopez at Quaint Oak Mortgage. Participants in the program are paying up to a couple thousand dollars to get into homes, he said.

An early home loan through the program went to a University of Pennsylvania employee and mother who recently got divorced and wasn’t able to save more than a few thousand dollars, Lopez said. She spent six months losing bids for homes because she needed the seller to cover some costs, and sellers chose buyers who didn’t need their help.

“This program was an absolute godsend for her,” Lopez said. “If it wasn’t for this loan, she would have been really hard-pressed to buy.”

Caitlin Riggsbee, a 29-year-old freelance documentary producer, had been squirreling away money for years to eventually buy a house, but she didn’t have enough. One day, she was doing some “rapid-fire Googling” to look for home-buying grants when she found an Inquirer article about the program.

She said her fiancé, George Kielty, likes to joke that “we went to bed one night and woke up and Caitlin had this crazed look in her eye and said, ‘I think we can buy a house this year.’”

While the couple rented, there was always the worry that the owner of their home could decide to put them out. It had happened to Riggsbee’s grandparents, who were forced out of the North Jersey apartment where they’d raised Riggsbee’s mother because of rent increases and ignored maintenance requests. Her grandmother now lives in a home she owns.

“That story has always stuck with me as to why this was a goal,” Riggsbee said.

She and Kielty started and finished their home search over a couple of weeks in February and closed on a two-bedroom, 1½-bathroom rowhouse in Fishtown on April 5. She said the whole process was “smooth as butter.”

“It’s taken such a load off mentally to say this is our permanent home,” she said. “This is where we’re going to start our marriage and start to put down roots.”

That’s thanks to the $16,500 they got for the down payment as well as additional funding through the program. “We didn’t obliterate our savings,” she said.

In fact, after she got some money back at closing, she spent only about $1,000 to buy her home. She’s been telling everyone about the program.

Reyes Pardo’s message to aspiring homeowners is to consider assistance programs even if they think they have too little money to purchase a home or make too much money to qualify for help.

“People tend to self-disqualify before they actually talk to a housing counselor about how to obtain those resources,” he said. “It breaks my heart every time I come in contact with someone who bought a house … and I ask why they didn’t apply for these programs and the answer is, ‘I didn’t know I could qualify for these.’”

To qualify for the Philadelphia pilot of the Revitalizing Neighborhoods and Increasing Homeownership first-time home buyer program, participants must live in Philadelphia and buy a home in the city. They can make up to $196,200 in individual income and can use program funds to buy a home that costs up to $659,000. The high limits allow young professionals to qualify for assistance.

Ceani Oliver is a 28-year-old nurse whose goal for homeownership was to buy a multifamily property she could both live in and rent out for passive income.

“A lot of programs and grants they have out there have an income limit that, unfortunately, I do not fit into,” she said.

In March, she closed on a renovated duplex in Kingsessing that has a finished basement she’s turning into a third unit. And she also was able to pay down her student loans.

Oliver plans to move in by the end of May and build off of this experience to one day purchase more investment properties.

“I have two little girls to leave legacies to,” she said.