First time home buyers can expect to meet certain qualifications before they apply for home buyer grants.
The U. S. Department of Housing and Urban Development, or HUD, makes these grants available to the several states and their housing commissions in the cities and counties. Thus, they are not accessible to individuals directly, but through housing agencies. HUD has requirements the first time home buyer must meet before grants are made available. The local housing agencies can walk grant seekers through the process as and when these requirements are met.
What Are First Time Home Buyer Grants?
Home buyer grants are meant to be used toward the purchase of a first home. The grant will constitute less than 10% of the home’s value, and can be expected to cover such things as closing costs. These grants have few differences from state to state, according to each state and municipality, so read a list of them to find a grant for which you qualify.
Grant seekers can also check on the American Dream Downpayment Initiative, which was signed into law in 2003 to help low income first time home buyers with down payments, closing costs, and sometimes rehabilitation of a home. This grant is bounded by assistance with the first $10,000 or 6% of the house’s purchase price.
Home Buyer Grants Requirements
Each local and state housing agency will have its requirements for grants for first time home buyers, who will be expected to fit the income statistics for that area. Even if the first time home buyer has owned a home before, a certain number of years must have passed before s/he is again eligible for a grant. But generally, the first time home buyer’s income must not exceed 80% of the median income, or the income of those owning homes in the area. If the first time home buyer cannot qualify for a mortgage, a grant will not be awarded.
In addition to local requirements, HUD will also require first time home buyers to attend classes which will teach them how to qualify for a mortgage. Budgeting and economics are essential toward managing home finances, so passing these classes will teach the seeker to better manage their money so they’ll qualify for a mortgage.
Timing Is Everything
Because local agencies operate on a “use it or lose it” basis, meaning that they will lose their grant money until the next fiscal year comes in if they don’t give it out, they might have some time requirements you need to know about. Some require first time home buyer grants to be repaid at refinance or sale of the home, while others require residence for up to 7 years, then the loan is forgiven.
So make sure you double check with your federal or state authority about the home buyer grants requirements before you apply! Should be quick and it will bring peace of mind…