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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.


Woman reading a notebook

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.

  1. 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.
  2. USDA loan – A loan program guaranteed by the U.S. Department of Agriculture for lower-income borrowers in eligible rural areas.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.