Learn About Grants for First-Time Homebuyers

Many Americans dream of owning a home, but often view it as unattainable. Residents worry that they do not earn enough or that their credit scores are too low to qualify for financing. Others are concerned that they have not saved enough for a down payment. Even if prospective homebuyers cannot qualify for traditional financing, they may be able to get a federal grant to purchase their first home.

About First-Time Homebuyer Grants

Many federal grants are available for qualifying buyers from the Department of Housing and Urban Development (HUD). Eligibility requirements typically depend on credit score, down payment and ability to obtain a mortgage. However, HUD requirements are usually not as difficult to meet as those for traditional financing.

How the Government Helps First-Time Homebuyers

First-time homebuyers are better able to afford and purchase a home when their mortgages are insured by the Federal Housing Administration (FHA). Furthermore, residents searching for homes can find some listed by HUD. However, prospective buyers receiving assistance from a federal government program in their home purchase must also participate in HUD-approved finance counseling. This will help them qualify for a mortgage.

Learn About Vouchers for First-Time Homeowners

Residents who do not qualify for any of the grants mentioned in the previous section may be eligible for tax credit from the Internal Revenue Service (IRS). The IRS offers tax breaks for first-time homebuyers. In addition, other grants for first-time homeowners are available from local and state government assistance programs.

For instance, families receiving federal housing benefits may be able to acquire subsidies from HUD’s Homeownership Voucher Program to use towards a home. Under the voucher program, participants receive assistance for monthly mortgage payments and household expenses. In order to qualify, applicants must meet HUD and local public housing authority (PHA) criteria:

  • Meet minimum income requirements
  • One adult in the household must be working full-time for at least one year
  • Be a first-time homebuyer
  • Complete HUD homeownership and counseling programs

Interested residents should contact their local PHA. If a PHA does not administer the homeownership program, applicants can apply with HUD directly.

Learn About Federal Housing Administration (FHA) Loans

Residents considering purchasing a home can do so through one of two HUD programs. One way to purchase a home is to apply for an FHA loan. The requirements for an FHA mortgage are manageable for low-income applicants and less strict than traditional mortgages. For instance, the down payment under an FHA loan can be as low as 3.5 percent of the price of the home.

Moreover, FHA loan applicants do not need high credit scores to qualify. In addition, closing costs may be partially covered or lower than those for other loans. It is important to know that FHA does not directly lend money. Instead, residents’ loans are insured by FHA-approved lenders in the case that homeowners default. Applicants will need to find an FHA-approved lender in order to apply for this type of loan.

What is the Good Neighbor Next Door Program?

The Good Neighbor Next Door is a HUD program that reduces the prices of home listing prices for law enforcement officials, teachers, fire fighters and emergency medical technicians (EMT). However, applicants must live in the home for a minimum of 36 months.

The sales program under Good Neighbor Next Door provides listings of properties. Available properties are listed at their discounted prices for seven days. Residents can find listing available in their state and follow the correct directions to submit their interest in a particular home. However, single-family home availability is limited and if one property receives many offers, the homebuyer will be selected based on a lottery system.

Moreover, recipients will be required to sign for a second mortgage and note to receive a discount on the house. As long as homebuyers fulfill their 36-month occupancy requirement, they will not have pay interest or other payments on their second mortgage.

Find Out About Loan and Mortgage Assistance for Veterans

Through the Department of Veteran Affairs (VA), veterans who are also first-time homebuyers may be eligible for refinancing, home loans, mortgage assistance and low interest rates. They may also qualify for Specific Adapted Housing (SAH) or Special Housing Adaptation (SHA) grants if they have disabilities.

An SAH grant can be beneficial for disabled veterans who want to live independently while SHA grants allow them to purchase or update a home to accommodate a disability. The primary eligibility requirement for both programs is a permanent and total service-related disability.

Evidently, it is possible for many Americans to become homeowners regardless of income or disability. There are numerous program available for residents with different needs and budgets.