First-Time Home Buyer Grants

by Roxanna Guinan, Contributor

There are several advantages to being a first-time home buyer in today’s struggling economy.  Not only do you have access to an enormous inventory of properties from anxious sellers, you also have negotiating power.  On top of that, federal and state governments have made funds available to first-time home buyers in the form of grants. The money from a grant can be used for a down payment or closing costs, alleviating some of the biggest expenses that first-time home buyers encounter.

To be eligible for a first-time home buyer grant, you (and your spouse) cannot have owned or purchased a home during the last three years. In most cases, grants are used to help finance single family homes, one- to four-unit housing, condominium or townhouse units, and manufactured housing. It is also important to note that there are usually income limitations for first-time home buyer grants, and requirements may vary from state to state.

Whether you are buying a house as a primary residence or as an investor, the U.S. Department of Housing and Urban Development (HUD) offers several programs designed to revitalize distressed communities by encouraging investment in real estate. These incentives help enhance property values and provide affordable housing for low-income families. Here is some information about first-time homebuyer grants and loan programs that is provided on the websites of various housing agencies around the country:

U.S. Department of Housing and Urban Development

[Website: portal.hud.gov//program_offices/administration/grants]

While HUD does not offer direct grants or loans to individuals, it does work through local governments and non-profit organizations to make financial assistance and counseling available.

There are some things you should know about government funding of a new home:

·      The Federal government does not give housing grants directly to individuals. The funds are given to states and certain municipalities, who in turn, distribute the funds to residents.

·      No grant will cover 100% of the cost of a house.

·      The government will not give a grant to anyone who cannot use it toward a mortgage loan; therefore, qualification for a mortgage is necessary.

·      Any program the Federal government has to assist first-time buyers in a home purchase will require that you attend a HUD-approved “Housing Counseling” class. These classes help people get their finances organized so they will qualify for a mortgage.

Florida Housing Finance Corporation

[Website: apps.floridahousing.org/StandAlone/FHFC_ECM]

Florida Housing’s First Time Homebuyer Program (FTHB) offers 30-year fixed interest rate mortgage loans to first time homebuyers through its network of participating lenders and lending institutions. However, if you are not a first time homebuyer, you may still be eligible for this program if you are purchasing a home in a Federally designated targeted area or are a qualified Veteran. This program uses income and purchase price limits to determine eligibility. Additionally, a potential homebuyer must complete a 6-8 hour face-to-face homebuyer education class, be able to qualify for a mortgage, and have a minimum FICO score of 640. Borrowers are required to contribute a minimum of $1,000 of their own funds into the transaction. Gift Funds meeting Agency guidelines are allowed.

Ohio Housing Finance Agency

[Website: www.ohiohome.org/homebuyer]

The Ohio Housing Finance Agency's (OHFA) First-Time Homebuyer program has helped thousands of low- and moderate-income Ohioans purchase homes of their own. The competitive interest rates and mortgage options on their 30-year, fixed-rate mortgage loans make it affordable for qualifying buyers to realize the dream of homeownership. OHFA's First-Time Homebuyer program offers several loan products for buyers based on their needs. To qualify for OHFA's First-Time Homebuyer program, you must meet at least one of the four qualifying categories:

·   You have never owned real estate;

·   You have not owned or had an ownership interest in your principal residence in the last 3 years;

·   You are a qualified military veteran; or

·   You purchase a home in a target area.

Texas Department of Housing & Community Affairs

[Website: www.tdhca.state.tx.us/homeownership/fthb]

Effective October 2012, TDHCA announced the release of $600 million in homebuyer assistance — the largest amount ever offered by the state — through a new mortgage-backed securities initiative that provides qualifying borrowers a number of advantages over the Department’s previous single family bond program. My First Texas Home’s "Taxable Mortgage Program" (TMP-79) offers more competitive fixed interest and annual percentage rates while providing down payment and closing cost assistance of 5 percent of the mortgage loan. The program features a number of other benefits homebuyers will find attractive; however, current eligibility guidelines still apply.

Nevada Housing Division (Department of Business & Industry)

[Website: housing.nv.gov/programs/First-Time_Homebuyer]

The Nevada Housing Division First-Time Homebuyer Program offers low- and moderate-income first-time homebuyers fixed interest rate 30-year loans. Additional assistance is available for down payment and closing costs. The Division also offers the Teachers First Payment Assistance Program. To learn more about the First-Time Homebuyer Program and assistance, see the First-Time Homebuyer brochure.