First-Time Home Buyer Grants

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Buying a home is a way to put down roots in a neighborhood and start building financial stability. It provides a roof over your head (and your family’s heads) as you pay down your mortgage and build equity for the future. Unfortunately, it’s not always easy for prospective buyers to save the amount of money needed for a down payment and closing costs.

According to a survey by (2016), Millennials (adults ages 18-34) are more likely than other age groups to have no money saved. Forty-six percent of young Millennials (ages 18-24) have no savings. Older Millennials (ages 25-34) are a little better at saving, with 20% having up to $1,000 in savings, but 41% have no savings at all. Seniors (adults over age 65) are most likely to have at least $10,000 on deposit in a savings account.

This doesn’t mean you’ve missed out on the dream of home ownership if you’re finding saving for a down payment challenging. First-time home buyer grants and other programs are available to help you get into your own home.

Tips for Applying for First-Time Home Buyer Grants

As you’ll see, there are a number of programs available to assist first-time home buyers. Consider these suggestions before you apply to increase the likelihood of having your application accepted.

  • Start Looking for Assistance Programs Well in Advance.  You’re going to have to take some time and do your homework to find a grant program that’s a good fit. Don’t leave this task until you’re ready to start looking for houses. You’ll want to start looking at potential sources of financial help when you start seriously considering a home purchase.

  • Read the List of Qualifications Carefully.  The list of qualifications for a grant program is something that is nonnegotiable. Unless you’re able to meet each qualification, you shouldn’t apply for the financial help. Your application will be rejected.

  • Be Sure to Include All Requested Supporting Documents.  If you’re asked to provide any documents along with your application, make sure that you have provided each one before submitting the package. Missing documents will delay the processing of your application, and you may be turned down altogether.

Examples of First-Time Home Buyer Grants and Programs

Grants for first-time home buyers are offered from a number of sources. This list is not meant to include all of the help that is available. You can go online and search for “first-time home buyer grants” + [your city] to find more options. If you prefer to find this information personally, a Realtor or a banker should be able to tell you about programs available near you.

National Home Buyer Grant Programs and Assistance

The following first-time home buyer programs are available across the United States. You’ll have more competition for these than for local programs, but the benefits are often greater.

  • HUD Good Neighbor Next Door Program.  The Good Neighbor Next Door Program is open to firefighters, law-enforcement officers, emergency medical technicians, and teachers (pre-kindergarten through 12th grade). This program offers an incentive to buy homes by offering 50% off the listed price of houses in specific neighborhoods. In return, the buyer agrees to live in the house for three years as their principal residence.

The buyer signs a mortgage and a note for the amount of the discount. No payments are required on the second mortgage and no interest is charged as long as the 36-month residency requirement is met.

Single-family homes offered for sale in revitalization areas are listed in the Good Neighbor Next Door Sales program on an exclusive basis for seven days. If more than one person is interested in a home, the decision about who gets the house is made by lottery.

  • Fannie Mae Ready Buyer™ HomePath Program.

Sometimes, a home goes into foreclosure despite the owner’s best efforts to avoid it. Fannie Mae’s goal is to sell these properties (single-family homes, townhouses, and condominiums) quickly. The properties are listed for sale on before they are made available to investors.

To attract first-time buyers to these homes, the HomePath Program offers the flexibility of:

  • Requiring down payments as low as 3%

  • Allowing parents or others to be co-borrowers without having to live on the property

  • Including additional sources of income, such as rental payments from a basement apartment on the property, when qualifying prospective buyers

Talk to a lender to see whether you qualify for this program. If you’re willing to be flexible about the type of home you want to buy and can act quickly, you can save a lot of money on your down payment.

State Programs for First-Time Home Buyers

There are a number of state programs for first-time home buyers. When researching available help, go to your state’s housing resource website. The most up-to-date information about program availability and how to qualify will be posted there and will  include programs like these:

  • Georgia Department of Community Affairs/Dream Homeownership Program.  This program is available to low- and moderate-income Georgia residents. To participate in the Dream Homeownership Program, you must be a first-time home buyer, someone who has not owned a home in at least three years, or someone who is prepared to buy a home in a targeted area (an “area of chronic economic distress”).

The Dream Homeownership Program offers down payment assistance through a 0% loan with no monthly payment. (You would have to contribute a minimum of $1,000 of your own funds toward the down payment on a home.) A second mortgage lien is put on your home, and the loan is paid back when you sell or refinance your home. The loan proceeds are then used to fund another 0% loan under the program.

To start the process, contact a participating lender to find out whether you pre-qualify under the program. Then you can start looking for your new home!

  • Kentucky Housing Corporation Down Payment/Closing Cost Assistance.  The Kentucky Housing Corporation knows that first-time homebuyers can find it challenging to save for a down payment and closing fees. The corporation offers low-interest loans up to $6,000 to be paid back over a 10-year term.

  • Nevada Home Is Possible Program.  Through the Home Is Possible Program, eligible homebuyers can receive up to 5% of the value of their home loan. These funds can be used toward the down payment or closing costs. The financing, which is offered with a 30-year interest rate, is forgivable if you stay in the home for at least three years.

Applicants must meet the following requirements as of the writing of this blog:

  • Income must be below $98,500

  • Purchase price of the home must be lower than $400,000

  • Credit score must be 640 or higher

  • Applicant must live in the house as the primary residence

  • Applicant must attend a homebuyer education course

  • Applicant must pay a one-time fee of $675

If you’re interested in this program, find a Home Is Possible lender to learn more.

Local Home Buyer Assistance Programs

Your local bank may be able to help you save for a down payment or help with matching grants. Down payment gift assistance programs allow the seller or another organization to provide some tangible help toward the cost of owning your first home.

  • Down Payment Gift Assistance Programs.  A down payment gift assistance program is also called a “down payment grant program.” Here’s how it works: A homeowner decides to sell her property. She also wants to help a first-time home buyer and enrolls in a gift assistance program.

The homeowner chooses the amount of financial help she wants to provide to the home buyer and contributes the funds, plus a service fee. On the day of the closing, the down payment funds are wired from the gift assistance program to the closing agent.

The home seller is barred from giving the home buyer any money directly toward the down payment. Since the funds are being provided from the gift assistance program to the home buyer through a wire transfer, the homeowner is kept at arm’s length during the transaction.

Some lenders, such as Fifth Third Bank, offer down payment assistance programs to first-time home buyers for 3% of a home’s purchase price (up to $3,600). The funds can be used toward the down payment or closing costs. A minimum credit rating of 600 is required to qualify, and the money doesn’t need to be paid back.

  • Quontic Bank - First Home Club.  Quontic Bank has its headquarters in New York. The bank has opened branches in several states, including Georgia, Indiana, Massachusetts, and Florida. With the First Home Club program, qualified home buyers can get help saving for their first home from the bank’s matching grant program.

Simply make a deposit each month into a Quontic Bank savings account. For every dollar deposited, the bank will match the contribution by $4, up to a maximum of $7,500 in total. The money can be used for the down payment on a home or toward closing costs.

If your savings account is looking pretty underfed, it may be worth the effort to seek out first-time home buyer grants to help get your family into a home of your own.  Not only will your rent payments turn into equity, you’ll have the security of belonging to a community—that’s perhaps the biggest benefit of owning a home.