Home buyer grants provide essential financial assistance. When purchasing a home, most borrowers are required to provide a down payment. Down payments are a significant hurdle to homeownership for those who can’t afford it. Suppose that you are required to put down a minimum of 5 percent, and you’re looking at a home that costs $200,000. That’s a $10,000 down payment that you would need to provide upfront.
Surveys have shown that down payment assistance grants provide homebuyers with an average of $17,766 in savings – from down payments and closing costs to savings experienced throughout the life of the loan. Learn how to qualify for these housing grants below.
Most down payment assistance grants will require you to work with a lender or mortgage program approved for the particular grant. However, these grant programs will generally work together with popular loan programs and their lenders, including:
- Veteran Affairs loans
- USDA loans
- FHA loans
- Conventional loans, such as those backed by Freddie Mac and Fannie Mae
To obtain a home buyers grant, you will need to meet set guidelines for the grant program. These qualifications ensure that grant money is provided to those who need it most. While these guidelines often differ between programs, many grant programs are only available to:
- Buyers who meet set income limits
- Buyers who intend to use the home as their primary place of residence
- Buyers who are working with an approved mortgage lender
- Homes located in certain areas or counties
First-time home buyer grants will also specifically require that the buyer has not previously been a homeowner before. However, other housing grants do consider previous homeowners as first-time (or just qualified) home buyers if they do not currently own a home.
Other grants might also consider the type of home you previously owned when determining if you are a first time buyer. For example, a first time homebuyer grant program may not consider an applicant to be a previous homeowner if they have only purchased a mobile home before.
Note: Homebuyer assistance programs are available at the federal, state and local levels. Therefore, the options available to you can vary based on where you are located.
While down payment assistance grants are primarily used for down payments, some grant programs also assist with closing costs and other home-buying fees.