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Learn About First-Time Homebuyer Grants

Buying a home is something many people aspire toward. Unfortunately, this dream can often seem unattainable.

Maybe you think your credit is not good enough to buy a home or you do not make enough money to get financing. You might also feel that you have not saved up enough for a down payment.

Regardless the reason, if you cannot access traditional financing to purchase a home, you may be able to qualify for a first-time homebuyer grant from the federal government. These can help you buy a home even if you do not have the credit to get regular financing.

About First-Time Homebuyer Grants

The Department of Housing and Urban Development (HUD) administers many federal programs that help first-time homeowners purchase a home, as long as they qualify.

According to HUD, qualifying for a first-time buyer grant depends on your credit score, your ability to obtain a mortgage and the amount of cash you can put down.

However, requirements for these grants are typically much less stringent than those for obtaining financing for a mortgage.

How does the government help first-time homebuyers?

The Federal Housing Administration (FHA), which is part of the HUD, insures the mortgages of eligible first-time buyers, making it easier for potential first-time homeowners to be able to afford a home through a loan. The HUD also offers homes for sale.

Any federal government program that assists first-time buyers in a home purchase will require that you attend an HUD-approved counseling class to get your finances organized so that you will qualify for a mortgage.

Find Out About First-Time Homeowner Vouchers

If you do not qualify for a homebuyer grant listed above, you may qualify for a tax credit established by the Internal Revenue Service (IRS). Through the IRS, you may benefit from a tax break if you prove that you are a first-time homebuyer.

There are also many first-time homeowner grants made available through assistance programs from the local, state and federal government.

HUD’s Homeownership Voucher Program provides low-income families or those in public housing who want to become first-time homeowners with subsidies that they can use toward buying a home.

The voucher program can help you with your monthly mortgage payments and other household expenses. Eligibility for the program is based on the requirements as defined by HUD and your local public housing agency (PHA).

In order to be eligible, you must:

  • Be a first-time homebuyer, as defined by the HUD.
  • Meet a minimum income requirement as set by your local PHA.
  • Have a least one adult who works full time and for a length of at least one year.
  • Complete a homeownership and counseling program through the HUD.

To apply for the Homeowner Voucher Program, you must contact your local PHA. If you learn that it does not administer a homeownership program, you can contact the HUD directly.

About Loans With the Federal Housing Administration (FHA)

If you are considering buying a home, the HUD offers two programs to first-time buyers to make the process more affordable. If you are a first-time homebuyer, your best option may be to get a loan through the Federal Housing Administration (FHA).

The FHA manages the FHA loans program and may be a good choice in getting a mortgage for first-time homebuyers because mortgage requirements are not as strict compared to other loans. Your cash down payment can be as low as 3.5 percent of the purchase price of the house.

Additionally, to receive an FHA loan, your credit score does not need to be particularly high, and the closing costs may be partly covered or lower than for other available loans. It is important to note that the FHA does not lend money directly to individuals and that it insures mortgage loans from an FHA-approved lender against default.

To apply for an FHA-insured loan, you are going to need to use an FHA-approved lender.

About the Good Neighbor Next Door the Program

If you are a law enforcement officer, firefighter, teacher or emergency medical technician (EMT), you may qualify for HUD’s Good Neighborhood Next Door program, which offers a large percentage off the home listing price. In return, you must commit to the program that you will live on the property as your sole residence for at least 36 months.

You can find a list of eligible, single-family homes for sale, located in revitalization areas, through the Good Neighbor Next Door Sales program. All properties are available for purchase through the program for seven days.

To participate in the program, you can find listings for your state and follow the specific instructions to submit your interest in purchasing a house that you find.

The number of available single-family homes is limited. If one single-family home receives more than one offer, the selection will be made by a lottery.

As part of the requirement, HUD will have you sign a second mortgage and a note for the discount amount. There will be no interest or payment requirements on the “silent second” provided that you fulfill the 36-months occupancy requirements.

Learn About Loans and Mortgage Assistance for Veterans

If you are a U.S. veteran and a first-time homebuyer, you may be eligible for a home loan or mortgage assistance and lower interest rates if you need to refinance a home, through the Department of Veteran Affairs (VA).

You may also be eligible for a Specific Adapted Housing (SAH) grant or a Special Housing Adaptation (SHA) grant. Both grants benefit veterans with disabilities.

SAH grants help veterans with certain service-connected disabilities live independently in a barrier-free life, and SHA grants help veterans adapt or purchase a home to accommodate his or her disability.

Eligibility for either program requires you to be a service member or veteran with a permanent and total service-related disability. Spots for the program are limited, so it is best to apply as soon as possible to receive assistance.

The federal government knows how much purchasing a home means to certain families, which is why it offers many programs to help many different kinds of first-time homeowners get into their dream homes.

Regardless if you are a low-income consumer or if you have a disability, you may be able to find help buying a home.

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