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Learn About Grants For First-Time Homebuyers

You may dream of purchasing a home of your own, but doing so is not always possible, especially if your credit score is too low or you do not have enough money in your savings account to cover the cost of a down payment. Or, maybe your income is not high enough and you do not qualify for a conventional loan to finance your home. While these types of situations may discourage you, it does not mean that your dream of purchasing a home is unattainable.

Through the federal government, you may qualify for a first-time homebuyer grant to assist you as you purchase your first home. For instance, grants are available through the Department of Housing and Urban Development (HUD) and the Department of Veterans Affairs (VA), while other types of assistance programs are available through the Federal Housing Administration (FHA) and the Internal Revenue Service (IRS). Review the information below to learn more about these grants for first-time homebuyers.

How the Government Helps First-Time Homebuyers

Through the HUD, qualifying consumers may be eligible for a federal grant to help them purchase their first home. While the eligibility requirements for these federal grants are less strict than those for most conventional financing options, consumers may or may not qualify for assistance depending on their credit score and the amount they are able to provide as a down payment. When determining their eligibility for assistance, the HUD will also consider whether consumers are able to obtain a traditional mortgage.

Additionally, consumers can purchase homes directly through HUD. However, anyone who wishes to receive government assistance when purchasing their first home must attend a financial counseling course that has been approved by the HUD.

Discover the HUD’s Good Neighbor Next Door Program

Another mortgage assistance program under the HUD is available to emergency medical technicians (EMTs), firefighters, law enforcement officers, and teachers. Known as the Good Neighbor Next Door (GNND) program, applicants who work in positions such as these may qualify for a sizeable discount on the purchase of their new home. However, applicants must agree to live in the home for at least 36 months, and the must use the property as their sole place of residence. Additionally, they must sign a note and second mortgage.

To get started, qualifying applicants may search for available homes directly through the GNND Sales program. While home availability is limited, consumers may perform an online search to obtain a list of GNND homes in their state. After clicking on a listing, applicants will learn more about the different steps they must take to express their interest in the property. If more than one offers are made on the same single-family home, a lottery will be used to select a buyer at random.

Learn About The Federal Housing Administration

As part of the HUD, the FHA also makes it easier for first-time homeowners to finance a home by providing them with an insured loan. With an FHA loan, eligibility requirements are less strict that those for other loans, and down payments are often very low. In many cases, the down payment on a home can be as low as 3.5 percent of the total purchase price. Moreover, applicants do not need a high credit score to qualify for an FHA loan, and their closing costs may also be lower. To obtain an FHA loan, however, customers must apply for a loan directly through a lender that has been approved by the FHA.

Discover Vouchers for First-Time Homebuyers

While not everyone will qualify for a federal grant when purchasing their first home, additional options are available. For instance, another option may include a tax credit from the IRS. Through the IRS, first-time homebuyers may qualify for a special tax break if they can prove that they are purchasing a home for the first time.

Moreover, the HUD also administers a Homeownership Voucher Program that assists low-income consumers who wish to apply subsidies toward the purchase of their first home. While consumers must meet several important eligibility requirements in order to receive benefits under the program, qualifying households may use their vouchers to cover a portion of their monthly mortgage amount and additional living expenses. However, eligibility requirements include the following:

  • Consumers must be first-time homebuyers
  • Applicants must meet minimum income restrictions
  • At least one applicant must be an adult who has worked full-time for at least one year
  • Applicants must complete a HUD-approved counseling program

In addition to these eligibility requirements, consumers must meet the regulations of their local public housing agency (PHA). Applicants may contact their local PHA to learn more about these requirements, or they may contact the HUD if their PHA does not administer programs such as these.

Find Out About Homebuyer Assistance for Veterans

Qualifying U.S. veterans who wish to purchase their first home may be eligible for homebuyer assistance through the VA. Several available programs for veterans include mortgage assistance, home loans, and lower interest rates for those who wish to refinance a current home.

Moreover, veterans with disabilities may also qualify for assistance through the VA’s Special Housing Adaptation (SHA) or Specific Adapted Housing (SAH) grant. The benefits of each type of grant include:

  • Special Housing Adaptation (SHA) grants help veterans with service-connected disabilities to purchase a home that accommodates their disability, or they may adopt a current home to accommodate their needs.
  • Specific Adapted Housing (SAH) grants help veterans with service-related disabilities to live more independently in an environment that is free of barriers.

To qualify for either type of grant, applicants must meet several eligibility requirements. For example, SHA and SAH grants are only available to qualifying veterans and service members with permanent and total service-connected disabilities. While program availability is limited, veterans can increase their chances of receiving assistance if they apply as soon as possible.

To help consumers attain their dream of purchasing a home, the federal government provides them with many different options for obtaining mortgage assistance, regardless of whether they hold a disability, do not have enough credit, or cannot afford to purchase a home on their own.

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