Few programs designed to assist homebuyers in purchasing a home are truly grants. Instead, many of these programs are loans or other forms of financial assistance, repayment of which is waived after the buyer meets certain requirements, such as remaining in the home for a specified number of years.
Federal Government-Funded Grants
Every grant program administered by the Federal Government is listed at Grants.gov. This website contains general information about grants, eligibility requirements, and application methods. Federal Government-offered grants designed to assist individuals in purchasing a home include:
Good Neighbor Next Door
Offered by the Department of Housing and Urban Development (HUD), the Good Neighbor Next Door program offers a discount of up to 50% on the list price of a home for sale in a revitalized area to:
- Law enforcement officers
- Pre-kindergarten through 12th grade teachers
- Firefighters
- Emergency medical technicians
Homes must be included on the Good Neighbor Next Door Sales list, upon which they are typically only listed for several days. In the program, qualified applicants are required to assume a second mortgage for which no payments are due as long as the purchaser occupies the home for three years, at which time the mortgage is released. The grant, therefore, is in the form of a mortgage for 50% of the home's purchase price that is waived after three years.
To apply, individuals first search for a home available through the program and submit a form indicating interest in the property. HUD will then investigate the individual's background to ensure that eligibility criteria are satisfied and, if so, begin the sales process. This includes working with the individual's lender for the primary mortgage and beginning the process with the HUD servicing center for the secondary mortgage.
Mutual Self-Help Technical Assistance Grants
Administered by the U.S. Department of Agriculture, this program awards grant funds to non-profit organizations overseeing groups who work building each other's homes in return for a reduced price on the completed home. Although grant funds are directly given to non-profit organizations, group members also receive a grant in the form of a lower-priced home. To apply for this program, individuals must submit an application with their local rural development office.
State Government-Funded Grants
Some states offer programs that are not limited to first-time homebuyers. Below are some examples of these programs; check with the Housing Authority in your state to see if there are programs for which you may qualify.
Indiana Housing and Community Development Authority
The Next Home program offered by this agency is designed for individuals who have previously owned a home. It awards up to 4% assistance for the home's down payment, which is fully forgiven after two years. To apply, individuals must contact a participating lender in their county to determine eligibility and borrowing limits as well as identify how much assistance they can receive.
Delaware State Housing Authority
This agency offers repeat home buyers with an opportunity to obtain a low interest rate on a loan and participate in down payment and closing cost assistance programs through its Delaware Talent Cooperative Homeownership Incentive. Loan rates are .50% less than currently offered rates.
Applicants must be a member of the state's Talent Cooperative, which includes teachers and related professionals who work in schools with underserved students. To apply, individuals must contact a participating lender and obtain a letter from the state's department of education verifying their membership in the Cooperative.
Iowa Finance Authority
This state agency offers assistance in the form of a low interest, fixed-rate mortgage through its Homes for Iowans program. It also offers a Homes for Iowans Plus program that provides individuals with up to $2,500 for a down payment or closing costs. To participate in either program, individuals must meet income requirements, not purchase a home valued higher than $305,000, and must work with an agency-approved lender.
Private-Funded Grants
Some private organizations also offer grants to homebuyers. For example, the Military Housing Assistance Fund offers grants to active duty members of the military, reserve personnel, and guard members. These grants do not need to be repaid. Applicants must first qualify for a loan through a private lender prior to contacting the Fund for assistance.
First-Time Homebuyer Grants
Although there are a limited number of grants available to homebuyers, there are also grants available to first-time homebuyers. These grants are offered only to individuals who have not previously purchased a primary home or who have not owned a home in a specified number of years. Some programs are administered by HUD, while others are state-managed.
Finding Your Grant
Even though grants for homebuyers are scarce, they do exist. Investigate these grants to determine if you are eligible or, if not, how you can become eligible. Doing so might save you quite a bit of money or make your dream of purchasing a home possible.
