If you are one of many Americans struggling to save up for a house, there are numerous homeownership programs that may be able to assist you. Perhaps you’ve put off buying a home because you haven’t been able to save up for a down payment or because you don’t have a great credit score. However, achieving the dream of homeownership might be much closer than you think if you know where to look. If you have been looking for homeownership assistance programs or grants for home buyers to help you afford a house and provide big cost savings, you’ve come to the right place. Show
Types of Homeownership ProgramsAccording to The Mortgage Reports, over 2,000 homeownership assistance programs are available nationwide. These programs can be categorized into a few different types of assistance for aspiring homeowners. It can be helpful to understand these distinctions so you know where to start your search for a loan. First, the most common type of assistance is grants for homeownership. These can come from various sources, but all act as gifts that are not repaid. Down payment grants are typically regulated on a local and state level. The other main type of homeownership help available to first-time buyers is loans — but not those from traditional financial institutions. Numerous loan programs offer benefits such as varied approval requirements, deferred payments, or even loan forgiveness over time. Each of these loan types aims to make homeownership more attainable for a variety of Americans. One well-known example is the VA loan, which provides Veterans the opportunity to purchase a home without a down payment. It should be said that the specific requirements associated with each program type will vary from loan to loan. Avoid ruling anything out until you are sure of the options available to you. Even if you do not meet the requirements of a grant in your area, for example, you may still be eligible for federal assistance when purchasing your first home. [ Do you control your finances or are your finances controlling you? Register to attend our FREE online real estate class and find out how real estate investing can put you on the path toward financial independence. ] Qualifying For Homeownership ProgramsMost homeownership programs are specifically designed for first-time buyers, but this term may not mean what you think. First-time homebuyers include people who have never purchase real estate and people who have not owned a home in the last three years. There are also income caps as well as purchase price caps for almost all of the programs listed here. Typically, eligible buyers have low to moderate incomes. The exact criteria per program varies, so don’t count yourself out before you know for sure! Aspiring homebuyers should also be prepared to enroll in home education or financial literacy courses. Many homeownership programs have some form of educational component to qualify. Luckily, this requirement can be helpful throughout the home buying process. Other potential requirements to qualify include working with an approved mortgage lender and purchasing the property as a primary residence. How Much Money Can I Qualify For?The amount of money you can qualify for depends on your geographic location, homeownership history, and the specific program or grant you are applying for. In some cases, this could take the form of a down payment grant for a few thousand dollars. In other cases, it could be a forgivable home loan in the tens of thousands. Again, the exact amount is purely circumstantial. There are also grants dependent on the total cost of the home. For example, certain programs with down payment assistance will provide three or five percent of the total loan in financial assistance. The best thing you can do to maximize the amount you receive is to research! There are numerous options available to utilize. Benefits Of Homeownership ProgramsHomeownership programs were created to help making buying real estate more accessible. And that’s exactly what they do. Homeownership programs can help aspiring homeowners purchase real estate on a much faster timeline than they would otherwise be able to. Not only do many programs make offers more competitive, but they can also save buyers money over time. Many times the most difficult obstacle when buying a house is saving for a down payment. It can take years to save up the standard 20 percent. However, many homeownership programs require a reduced down payment. This can help aspiring homebuyers achieve ownership on a much sooner timeline. 13 Homeownership Assistance ProgramsBoth public and private entities are offering home buying programs and grants in a concerted effort to encourage homeownership in the U.S. These programs mostly target first-time homebuyers, as well as low to moderate-income households. There are 13 different homeownership assistance programs to choose from; some are sponsored by federal agencies, while non-profit and private entities offer others. Each section below provides an overview of a program or grant, along with a breakdown of who the program is meant to help and its eligibility requirements. If you’d like more information, visit the official website provided for each respective program. Investment properties are not eligible for most homeownership assistance programs, which are primarily intended for owner-occupants. For those interested in investment properties, visit this resource on how to invest in real estate with little to no money of your own.
FHA LoanThe FHA loan is a go-to program for many Americans, especially first-time homebuyers. According to Jim Pendergast, Senior Vice President of altLINE, “FHA loans are the most common because they’re funded by the federal government.” The Federal Housing Administration (FHA) offers insurance to mortgage lenders so that they are not exposed to loss in the case of borrower default. This protection allows lenders to lower their eligibility requirements and extend mortgages to a larger pool of applicants. All FHA borrowers are required to pay mortgage insurance.
FHA 203(k) LoanThe FHA 203(k) rehabilitation loan can be a great solution for buyers who want to purchase a fixer-upper home. Factoring in the property’s after-repair value, the loan bundles the costs of purchasing and renovating the property. Borrowers requiring extensive renovations above $35,000 are required to hire an approved consultant, who will also serve as the contractor and project manager. Find out more about whether or not a FHA 203(k) loan is right for you.
VA LoanVeterans and active service members of the military are eligible to obtain mortgage assistance from the U.S. Department of Veterans Affairs (VA). The VA loan does not require a down payment or private mortgage insurance and offers competitive mortgage rates. The agency also sponsors grants for veterans who need to adapt homes for service-related disabilities.
USDA LoanDesigned to promote economic development, the U.S. Department of Agriculture (USDA) mortgage program assists low- to moderate-income households with the purchase of homes in rural areas. The loan can also be used to repair and renovate a property, make a property more energy efficient, or even install essential household appliances.
Good Neighbor Next Door HUD LoanPublic service workers who qualify for the Good Neighbor Next Door program have the opportunity to purchase homes at half the list price. The Department of Housing and Urban Development (HUD) implemented this program to revitalize areas, make communities safer, and promote homeownership. Eligible properties are sold exclusively through the Good Neighbor Next Door sales program.
Native American Direct LoanStarting in 1992, the Native American Direct Loan (NADL) program has made home loans available to Native American veterans who want to buy property on federal trust lands. The U.S. Department of Veterans Affairs serves as the lender, and borrowers enjoy not having to make a down payment or pay private mortgage insurance.
Energy Efficient MortgageInsured through both the FHA and VA, the Energy Efficient Mortgage (EEM) is a loan program that incentivizes homebuyers to purchase energy-efficient homes or buy homes that they will make energy-efficient through improvements. The EEM is added to an existing mortgage and does not affect the down payment amount or require a new appraisal. Existing homeowners can also apply for the EEM benefit to save on energy costs and increase the resale of their properties.
Local Homeowner Assistance ProgramsHomebuyers can also look to their city or state governments for assistance. These homeownership assistance programs are typically designed for first-time and low to moderate-income buyers. They offer competitive mortgage programs, down payment and closing cost assistance, and home buying education. Check your local or state housing authority to determine what types of programs are available and the eligibility requirements for each.
National Homebuyers FundThe National Homebuyers Fund is a non-profit organization that offers financial assistance programs for homeowners and homebuyers. Perhaps their most prominent is their down payment assistance grant, which can provide up to five percent of the mortgage loan. The organization also manages down payment assistance, mortgage credit certificate (MCC), and energy efficiency programs for California residents, in partnership with the Golden State Finance Authority. The National Homebuyers Fund can provide up to a $10,000 down payment for any homebuyer with low to moderate income. The National Homebuyers Fund requires:
Money for the National Homebuyers Fund is from penalties certain lenders had to pay for not following the Global Financial Crisis guidelines. You can find similar programs in other states that are tax dollar funded. However, these programs can change in accordance with fluctuations in funding.
First Home ClubSponsored by the Federal Home Loan Bank of New York, the First Home Club is designed to assist first-time homebuyers with low-to-moderate incomes. The program will match funds saved in a dedicated savings account $4 to $1, and up to $7,500.
HomePath Ready BuyerThe HomePath Ready Buyer program is administered by Fannie Mae, a government-sponsored entity that offers mortgage options that benefit low- to moderate-income households. The homeownership assistance program targets first-time buyers, who are required to complete an online educational course. Upon completing the course, buyers are eligible to receive three percent toward closing costs when purchasing a foreclosure home owned by Fannie Mae. Buyers can also make a down payment that is as low as three percent.
Freddie Mac’s Home PossibleHome Possible is funded by Freddie Mac, a government-funded entity often referred to as the counterpart to Fannie Mae. There are numerous similarities between the HomePath Ready Buyer program and Home Possible, including that they are both geared towards low-income applicants. The program is available to current and first-time homebuyers, who will be required to attend a homeownership education program. Home Possible requires a three percent down payment, and generally has lower fees when compared to other conventional loan providers.
Dollar HomesIf anything could be dubbed the eBay of homes for sale, the HUD’s Dollar Home portal would be it. When a homeowner defaults on an FHA-insured mortgage, it is foreclosed upon and repossessed by the federal government. These homes are then re-sold to the public and nonprofit entities at affordable prices, along with low down payment requirements and allowances that can be used to pay for closing costs or repairs. Interested buyers can bid on properties through the HUD Home Store, although their licensed broker or agent must submit bids. If you are interested in purchasing a dollar home as an investment property, be sure to visit this HUD Homes 101 resource for investors.
SummaryYou may have noticed that most of these programs offer low down payment requirements. However, it is important to note that down payments under 20 percent of the home value will typically result in mortgage insurance fees. If you prefer to put down a large down payment to avoid these fees, here is a resource on how to save for a house. These homeownership programs offer solutions to many Americans who would otherwise be unable to attain their dream of homeownership. Not taking advantage of these programs due to a lack of awareness is equivalent to leaving money on the table. Explore your options and find out if you might qualify for homeownership much sooner than you had imagined. Ready to start taking advantage of the current opportunities in the real estate market? Maybe you have plenty of capital, an extensive real estate network or great construction skills— but you still aren't sure how to find opportunistic deals. Our new online real estate class, hosted by expert investor Than Merrill, can help you learn how to acquire the best properties and find success in real estate. Register for our FREE 1-Day Real Estate Webinar and get started learning how to invest in today's real estate market!
The information presented is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing provided shall constitute financial, tax, legal, or accounting advice or individually tailored investment advice. This information is for educational purposes only. How can I get money for a new house?Five ways to buy a house with no money. Apply for a zero-down VA loan or USDA loan.. Use government assistance to cover the down payment.. Ask for a down payment gift from a family member.. Get the lender to pay your closing costs (“lender credits”). Get the seller to pay your closing costs (“seller concessions”). Are government grants legit?The federal government does not offer grants or “free money” to individuals to start a business or cover personal expenses, contrary to what you might see online or in the media. Websites or other publications claiming to offer "free money from the government" are often scams.
Is the government giving out free money?Offers of free money from government grants are scams. Someone might offer you a grant to pay for education, home repairs, home business expenses, or unpaid bills. But they're all scams. Here's how to avoid a government grant scam, and how to report it.
Who qualifies for down payment assistance in Florida?Income eligibility for down payment assistance ranges from 80% of 120% of an area's AMI. So, for example, if the midpoint income for an area is $50,000, to qualify for a down payment assistance program, your income must be between $40,000 and $60,000.
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