14 First Time Home Buyer Grants and Alternative Programs
Buying a home can be a dream come true, and it is one of the most exciting milestones you can reach in life. Fortunately, grants and programs are available that are tailored to help first-time home buyers navigate the process and save money in the long run.
What to Think About When It Is Your First Time Buying a Home
The process can be exciting and overwhelming when you are a first-time home buyer. It is important to take the time to research the options, as well as assess your current financial situation. When approaching home buying, consider the following points:
1. Financial Readiness
It is important to understand your financial situation and create a budget. Ensure you are comfortable taking on additional debt and have the funds to cover the down payment and closing costs.
Evaluate the neighborhoods you are interested in and make sure they are a suitable fit for your lifestyle. Consider proximity to work, schools, transportation, shopping, and other amenities that matter most to you.
3. Type of Home
When it comes to the type of home you are looking for, research the types of buildings, sizes, and land options. Consider what will work best for you and your family and if any of the home buyer grants and programs can help you achieve that goal.
14 First-Time Home Buyer Grants and Programs in 2023
1. Mortgage Revenue Bond
Mortgage Revenue Bond is a grant program facilitated by state and local governments for first-time home buyers in certain states. This grant can provide first-time home buyers with a fixed-rate loan and money to help cover down payments. Also they might offer a 0% interest second mortgage, which can cover up to 10% of the home's purchase price.
2. Mortgage Credit Certificate (MCC)
The Mortgage Credit Certificate (MCC) is a federal tax credit program that allows first-time home buyers to receive a non-refundable credit for a portion of their annual mortgage interest. This tax credit can reduce the amount of taxes owed and provides a source of funds for a down payment or closing costs.
The Good Neighbor Next Door program from the U.S. Department of Housing and Urban Development (HUD) is designed to help law enforcement officers, teachers, firefighters, and emergency medical technicians purchase a home. Homes must be located in a designated revitalization area, and applicants must have an employment contract with the appropriate government agency to be eligible. Good Neighbor Next Door is a program to assist these first-responders with home purchases. Qualified people can receive up to 50% off from the list price of the home, in return you must live there as a principal address for 36 months.
4. FHA Loans
FHA loans are loans insured by the Federal Housing Administration and are designed to help homebuyers. These loans often require a smaller down payment than traditional loans. Other benefits of FHA loans include higher loan-to-value and flexible underwriting guidelines.
VA loans are mortgages backed by the U.S. Department of Veterans Affairs and are available to active-duty and retired military personnel and eligible surviving spouses. These loans are designed to help veterans finance the purchase of a home with little or no down payment. VA loans also come with no mortgage insurance and competitive interest rates.
6. Local Authority Grants
Local authority grants are available in many areas throughout the country and are designed to give first-time homebuyers assistance with purchasing a home. Some grants are available through state, county and local housing finance agencies and offer assistance with down payments, closing costs, and other costs related to the home purchase.
The Conventional 97 loan is an option with the borrower using 97% loan-to-value. Qualified first-time home buyers can use the loan to buy and finance a home with a lower interest rate and monthly payments than conventional loan options.
The Hometown Heroes program is designed for a variety of first responders, with the ability to obtain up to 5% with a max of $25,000 which can be used for either closing costs or money down while the LTV can be exceeded more than typical. This money is not a grant, but paid back if the borrower does certain transactions such as selling the home or refinancing it, the rate of interest is at 0% for the borrowed funds.
The Native American Direct Loan Program is designed to assist Native American veterans looking to buy a home on federal trust land. These loans offer a fixed interest rate and do not require mortgage insurance. Borrowers are allowed to borrow up to 100% of the purchase price.
Construction loans are available for those interested in building their dream home. These loans are designed to finance construction costs and can be used for single-family, multi-family, and modular homes. Construction loans are typically offered with lower interest rates than traditional mortgages.
Many states offer bond programs that provide grants and reduced interest-rate loans to qualified applicants. These bond programs are typically for first-time homebuyers and offer various financial assistance options. In addition, many bond programs are available to help qualified military personnel, disabled veterans, and low-income families.
12.Green Home Building Grants
In 2023, several green home building grants and programs have been created to help first-time buyers build their dream homes from the ground up in an eco-friendly way. These grants assist with the costs of building materials, energy-efficient upgrades, HVAC systems, and solar power. In addition, some grants also offer loan assistance.
Community land trusts are nonprofit organizations established to buy, develop, and manage land for affordable housing. These trusts provide affordable housing for first-time homebuyers by offering below-market mortgages and protecting homebuyers from potential price increases. In addition, these trusts offer flexible configurations of homes that can be tailored to fit most budgets.
14. USDA Mortgage
USDA mortgages can borrow up to 100% of the purchase price of a home and is backed by the U.S. Department of Agriculture. Over 90% of the US land mass might qualify for this program, just be aware that it is address specific.
By understanding the available options, first-time homebuyers can make the process easier and more affordable. For those looking to buy a home, various grants and programs are available to assist.