What would it be like for 18-year-olds to be on track to be homeowners by 21? Imagine the impact this would have on the financial well-being of young people, their families and their communities.

Build UP, a first-of-its-kind private school in Birmingham, AL, is doing just that and more. The program empowers youth to stand firmly together, creating a critical mass of change agents to lead the longer-term revitalization efforts required to bring about a healthy, thriving community. Part of their work includes exploring what financial resources young people need in order to access homeownership early in life.

For six years (following the eighth grade), low-income students participate in a full-time, year-round program that supplants a traditional high school and college experience. Students spend half of their time in an academic setting, gaining knowledge that is directly applicable to their paid apprenticeships in the real estate and construction sectors. Additionally, Build UP apprentices work together to rehabilitate blighted, abandoned homes with durable materials and finishes. During the six years, each student earns a high school diploma and an associate degree in their chosen field.

Once students complete the Build UP program and either secure a well-paying job, launch their own enterprise or continue their education at a four-year university, they take over the deeds to two units they renovated as part of their training. In one fell swoop, they become both homeowners and landlords. Through zero-interest mortgages, graduates build wealth because 100% of each payment reduces principal and builds equity. They also earn income from their rental properties.

Prosperity Now has previously discussed the importance of youth financial capability, particularly in conjunction with workforce development programs. In “Beyond the Next Paycheck: Creating Opportunities for Young Workers to Thrive,” we report that compared to older generations, young adults are having a harder time making ends meet, are less likely to utilize formal financial products, and are exhibiting lower levels of financial literacy. Build UP’s model of paying students to go to school while learning skills for the workforce allows young people to build financial knowledge, create financial goals and improve financial stability through savings and homeownership. 

Compared to older generations, young adults are having a harder time making ends meet, are less likely to utilize formal financial products, and are exhibiting lower levels of financial literacy.

- Pamela Agava

Their promising model is one that Prosperity Now and Fannie Mae believes in, and we are pleased to announce our new partnership.  Together, we will launch an iterative version of our HomeReserve program. Prosperity Now will provide technical assistance to Build UP to design and implement a program where students open individual matched savings accounts that will grow as they matriculate through Build UP’s education program.  When the students take ownership of their homes, their savings will transfer to mortgage reserve match savings accounts.  This program model is in line with our now, soon and later savings model. Further, it supports the research that speaks to lack of cash savings as a major contributing barrier to purchasing a home and to households at risk for default, regardless of AMI.

For many low- and moderate-income households in the United States, buying a home means building upon a foundation of financial security to begin to create wealth. Given that most homeowners finance their home purchases with a mortgage, buying a home is also one of their largest sources of debt, presenting significant risk. Build UP’s unique program is combining early intervention with client-centered programming to break the systemic impacts of poverty in the communities they serve. We are excited to partner with them and look forward to being a part of each student’s transformative journey to prosperity.