Government Grants for First Time Home Buyers
You may have thought since the housing meltdown of a couple of years ago, that the government had decided to get out of the 1st time home buyer business. Don't worry; while they may have scaled back their operations, the government is still involved in helping first time home buyers purchase their first home. There are still grants available at both the federal and state levels that can be used toward closing costs and down payments. Any buyer would be foolish not to look into available government grants for first time home buyers before obtaining a mortgage. Even if the buyer does not qualify, they'll never know if they don't inquire.
Federal Housing Grants
It is true that the federal government has reduced its financial assistance to first time home buyers over the last several years. However, first time home buyer grants are still accessible through the Homes and Communities Program sponsored by the U.S. Department of Housing and Urban Development (HUD). To find out what specific grants might be available in your area, simply visit the HUD website. There you'll find grant details as well as other helpful information and tips.
A second web site called grant.gov is a comprehensive list of all grants currently available from the federal government. On that web site you can search for grants aimed specifically at first time home buyers and find application instructions for those you might be interested in.
One thing you need to know about federal grants however, is that oftentimes they are not made directly to the individual home buyer. Rather, federal grants are often given to the various states in a lump sum to be dispersed for the purpose for which they were intended. As an example, New York's SONYMA program offers five assistance products for first time home buyers. Federal housing grants designated for New York residents in most cases will be filtered through the SONYMA programs.
State Housing Grants
As demonstrated with the New York SONYMA program, every state in the union offers first time home buyer assistance to one degree or another. In some states these are offered directly as grants, while in other states financial assistance is offered through low-interest loans. The only way to know for sure what your state offers is to contact the proper agency that deals with housing issues (or read our state guides on this website). If your state offers housing grants, your realtor, lender, or real estate lawyer should be familiar with what's available and how to apply.
Using Alaska as an example, the Alaska Housing Finance Corporation offers several types of grants for first time home buyers including Accessibility of Modification Grants, Special Needs House and Grant Program, Grant Match Program, Greater Opportunities for Affordable Living, Home Ownership Opportunity Program, and several more. The agency's web site contains details about all of these grant programs and their qualifications.
Obtaining First Time Home Buyer Grants
The process of obtaining the first time home buyer grants is different from one grant to the next and from one government agency to the next. In some cases a grant is obtained simply by filling out an application to be submitted along with your mortgage application and purchase offer. These are the easiest to apply for and require just a few minutes of the buyer's time.
In other cases, a grant proposal must be written and submitted with the grant application. Requirements for grant applications and proposals vary so widely that it would be impossible to attempt to explain how to put this paperwork together. If you're not sure how to write a thorough grant proposal, this would be a task best suited to an individual who specializes in grant writing.
Due Diligence When Applying for First Time Home Buyer Grants
Be careful to conduct due diligence when applying for first time home buyer grants. Federal and state agencies generally do not give away money with no strings attached. Depending on the grant you apply for, there will be specific requirements that may include income, geographic location, age, race, sex, ethnic background, and other things.
Those who qualify for a given grant will also probably be required to meet certain conditions. For example, one state grant may require you to be the primary resident of the home for a specified amount of time. If, for whatever reason, you fail to remain in the home for that time you may be legally required to repay the grant. Sometimes repayment may even include interest and penalties.
Always be sure you thoroughly understand the terms and conditions of any first time home buyer grant you apply for. If you do not understand the wording or terminology, send a copy of the grant application requirements to your attorney for his or her perusal. Let them answer your questions until you're satisfied that you clearly understand the grant.
First time home buyer grants make home ownership possible for many people who would otherwise be unable to obtain a mortgage. They are an excellent tool for first time home buyers as long as those buyers thoroughly understand what they're signing up for and agreeing two.
