First-Time Homebuyer Grants: Your Essential Guide

For first-time homebuyers, purchasing a home is a huge financial commitment and in today’s pricing environment its also a considerable financial challenge for many Americans. However, homebuyer grants can significantly lighten the financial load, grants aren’t available to all home buyers and are usually aimed at lower income buyers.
Understanding Grant Eligibility
Requirements vary between programs, several common elements are worth noting:
• Income limits: Many programs consider households that earn 80 percent or less of the area median income (AMI) as “low-income.” Therefore, access to these programs is restricted to those within this income range. Moreover, the income limits adjust depending on the number of household occupants.
• Home price limits: Certain programs may restrict your spending to a specific range of residence prices. These limits are largely dependent on the local housing market.
• Buyer’s contribution: Despite the substantial assistance provided, most grants mandate that the homebuyer contributes some cash. The common requirement is 1 percent of the purchase price or $1,000—whichever is greater.
• Residency status: Typically, grants are only available to those intending to make the purchased property their primary residence, not a rental or second home.
• Education requirements: Numerous grant programs require you to complete a homebuyer education course before you can access the funds.
Here are some larger programs to consider but there are many state and local programs as well.
HomePath Ready Buyer Program
Offered by Fannie Mae, a government-backed mortgage enterprise, the HomePath Ready Buyer program allows you to claim up to 3 percent of your home’s purchase price for closing costs. However, your property choice is limited to HomePath properties, foreclosed homes owned by Fannie Mae. Completing a homebuyer education course is a prerequisite for this program.
National Homebuyers Fund
The nonprofit National Homebuyers Fund offers grants for down payments and closing costs, which can amount to 5 percent of your home’s purchase price. Notably, you don’t need to be a first-time homebuyer to qualify. However, you do need to secure a mortgage lender who participates in the program. Assistance is available to help find suitable lenders.
Good Neighbor Next Door Program
Offered by the U.S. Department of Housing and Urban Development, the Good Neighbor Next Door program is open to law enforcement officers, teachers, firefighters, and emergency medical technicians. This program offers a 50 percent discount on homes in designated revitalization areas, which becomes a freebie provided you live there for three years. However, like the HomePath program, you don’t have the freedom to buy just any home.
State and Local Grants
Beyond nationally available programs, financial assistance may be obtainable through local organizations. Many states offer grant programs for first-time homebuyers, especially those relocating for work. Consult your state’s housing finance authority or ask your real estate agent for advice on local grants.
These are just a few options to consider. You can schedule a consultation with us on our website and we can review your situation to help you see what you can qualify for and your different program options.