05 November . 2019
Grants May Help First-Time Home Buyers
Shopping for your first home is a life changing decision and shelling out big bucks for your first home can feel a bit overwhelming. Rising home prices have made it harder for potential homebuyers to save for a down payment which is prompting buyers to rely more on unconventional avenues to get their foot in the door.
Luckily, there are several first-time homebuyer programs and grants that can help you achieve your homeownership goals. This recent list, compiled by Bankrate, expands on several that are popular with first-time house hunters.
- FHA Loan – A loan insured by the Federal Housing Administration that’s ideal for borrowers with lower credit scores or little money saved up for a down payment.
- USDA loan – A loan program guaranteed by the U.S. Department of Agriculture for lower-income borrowers in eligible rural areas.
- VA loan – A loan backed by the U.S. Department of Veteran Affairs for military personnel, veterans and their families. VA loans have minimal closing costs, competitive rates and no down payment requirement, however, a funding fee is required for some borrowers.
- Good Neighbor Next Door – A HUD program that provides housing aid — a discount of 50 percent on a home’s list price in revitalization areas — for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.
- Fannie Mae or Freddie Mac – Loans backed by Fannie Mae or Freddie Mac require 3 percent down for conventional mortgages making them ideal for first-time buyers who have strong credit but little savings for a down payment.
- HomePath ReadyBuyer Program – A program that provides 3 percent in closing-cost assistance to first-time buyers who complete an educational course and purchase a foreclosed Fannie Mae property.
- Energy-efficient mortgage – An EEM is backed by FHA or VA loan programs and allows borrowers to combine the cost of energy-efficient upgrades onto a primary loan upfront — all without a larger down payment.
- FHA Section 203(k) – An FHA-backed loan that lets you borrow the funds needed to pay for home improvement projects and roll the costs into one loan with your primary mortgage.
- Local first-time homebuyer programs and grants – Many states and cities offer first-time buyer programs and grants for down payment or closing cost assistance. These programs typically come with income restrictions and have to be repaid when you sell the home.
- Native American Direct Loan – Backed by the VA, this program provides direct home loans to eligible Native American veterans to buy, renovate or build homes on federal trust land.