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First Time Home Buyer Grant

Home ownership is within reach with the help of a first-time homebuyer grant.

A first-time homebuyer grant offers special assistance to aspiring homebuyers who have not owned a home within the past three years. [©Jupiter Images, 2009]
©Jupiter Images, 2009
A first-time homebuyer grant offers special assistance to aspiring homebuyers who have not owned a home within the past three years.

A first-time homebuyer grant helps make home ownership a reality for individuals or families who might not otherwise be able to afford a house. A grant is an ideal form of assistance for a homebuyer because it need not be repaid and often the only requirement is that the household's income fall within a specified range. (That range is determined by the number of dependents in a family and the median income for the area in which the home will be purchased.) For the purposes of obtaining a grant, first-time homebuyers are defined as buyers who have not owned a home within the past three years.

Federal Homebuyer Grants

While the U.S. Department of Housing and Urban Development (HUD) itself does not offer grants to individuals, its funding is available through local government agencies and nonprofit organizations, who apply for and distribute the federal monies.

First-time homebuyers should be aware of special HUD programs available to assist veterans, hurricane evacuees, firefighters, teachers, emergency medical technicians, residents in public housing, American Indians and individuals with disabilities. For example, the Good Neighbor Next Door Program offers a discount of 50 percent to firefighters, teachers or emergency medical technicians who are willing to purchase a home in a revitalization area and live in the home for at least three years..

Homebuyers can also inquire about the possibility of obtaining seller-assisted Federal Housing Administration (FHA) down payment grants, which may be available to first-time homebuyers, as well as to low- and moderate-income individuals.

Obtaining Federal Grant Money

The Office of Management and Budget (OMB) reports that since 2001, HUD has assisted more than four percent of the U.S. population with housing payments. Potential homebuyers wishing to take advantage of this federal grant money should first determine how much they can realistically afford to spend on a home. Informed buyers can research programs available in their states in order to determine if they qualify for any assistance for down payments, closing costs or both. A HUD-approved housing counselor may be able to help with this, as well as with figuring out how to manage a mortgage.

The next step is to shop around for the best mortgage, as individuals must qualify for a mortgage before they can receive HUD assistance. Selecting a HUD-approved lender is necessary if a buyer wants to obtain a loan from the Federal Housing Administration. Comparing costs and interest rates will help the consumer save money on a home purchase.

Next, consumers need to check eligibility requirements for homebuyer assistance in the city or county in which the home is located. This information and the necessary applications are usually available on city or county Web sites. A good mortgage company should be able to provide some guidance on the application process as well. Buyers are also generally required to complete an approved home-buying course prior to closing on a house.

Local Grants for First-Time Homebuyers

In addition to federal grants, local grants may be available through community development corporations, state housing finance agencies or local nonprofit organizations. A state may offer special assistance to the disabled, persons of color and single parents. To begin looking for these location-specific grants, homebuyers can check the community and government pages at the front of a phone directory or contact the local office of housing and community development. The mayor's office or the county executive's office may also be useful points of contact for learning about local grants.

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