|
 First time home buyer grants can be an important source of funding for that new home. Unlike a loan or mortgage, a grant does not have to be repaid. That means these programs are targeted in areas where the government wants to invest in the revitalization of a community. That makes these home buyer grants important to both the home buyer and the community.
Federal Home Buyer Grants
We're going to save you some time researching federal funding available for first time home buyers by explaining the current operating model for these types of grants. The federal government does not make available housing grants to individuals or families. However, the federal government does make federal grants available to states and certain cities that are then responsible for distributing the funds to its citizens.
Grants for First Time Home Buyers
Most federal grants are targeted to the first time home buyer and they are intended to help get those same individual get started towards home ownership. These grants should not be expected to cover a large percentage of the new home's cost. In fact, most grants cover less than 10% of the home's value or the grant can be expected to help cover certain expenses associated with buying a home such as closing costs.
Home buyer grants are meant to be used towards the purchase of a new home, which means there are qualifying rules for these funds. Generally, grants will not be given to anyone that cannot qualify for a mortgage.
Finally, all federal grant programs for first time home buyers will require that the individual attend a HUD approved house counseling class. These classes help to prepare individuals for home ownership by assisting them in the process of getting their finances in order so they can qualify for a mortgage. For example, simple courses in home economics or household budgeting are important to the financial success of the individual and achieving the grant program's goals.
HUD has a complete inventory of house counselors on their website. Information for all 50 states can be found here.
American Dream Grant
The American Dream Downpayment Initiative (ADDI) is a federal grant program that was signed into law in late 2003. This is perhaps the most generous grant program run today. In fact, the American Dream Downpayment Assistance Act authorizes up to $200 million each year in grants and the program is set to run through 2007.
The ADDI program was created to help low-income first time home buyers to purchase new homes by providing funding for down payments, closing costs, and some rehabilitation projects. ADDI program assistance is limited to the greater of $10,000 or six percent of the home's purchase price.
Additional Home Grant Programs
You can find more information on this program by visiting the HUD website. There you will find information on Community Development Block Grants (CDBG), American Dream Downpayment Initiative (ADDI), Emergency Shelter Grants (ESG) and Housing Opportunities for Persons with AIDS (HOPWA).
HUD also offers you access to programs offered by state and local government or other housing assistances organizations. In most situations, you can find local contact information for such programs as Habitat for Humanity. Local assistance programs are usually listed for each county.
203(b) Mortgage Insurance
If you buy a home, HUD also has a mortgage insurance program for qualifying individuals. The mortgage must be obtained from a private lending institution such as a bank, savings and loan or traditional mortgage company. Under this program, the mortgage will then be insured by HUD.
Eligibility requirements for this program include:
- Meeting the FHA credit qualifications.
- Eligibility for 97% financing and upfront mortgage premiums can be incorporated into the mortgage itself.
- Borrowers are responsible for paying annual insurance premiums.
Limits apply to mortgages in each state, for more information on this program in your state, visit HUD's mortgage insurance website.
About the Author - First Time Home Buyer Grants
Copyright © 2005 - 2007 Money-Zine.com
|
Home 
