July 30, 2021

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Mortgage News

Best Grants for First-Time Homebuyers of 2021

Companies
and category
Grant amount Qualifications Availability First come, first served (Y / N)
National Homebuyers Fund, Inc.
Best overall result
Up to 5% of the mortgage amount Income limits as described by the lender, FICO 640+, DTI 45% or lower Nationwide Yes
PenFed Dream Makers Grant
Best for military and active duty veterans
Up to $ 5,000 Must be active military or veteran; First time homeowner; 30-year fixed-rate mortgage; Deposit of $ 500 or more; The property price cannot exceed $ 575,000 Nationwide Yes
Good Neighbor Next Door program
Best for first responders
Up to 50% discount on eligible house prices Must be a first aider, teacher or other qualified professional, the property must be located in a “revitalization” area specified by the HUD, must agree to use the property as a main residence for 36 months Yes Yes
Chase Enhanced Home Buyer Grant
Best for underrepresented people
Up to $ 5,000 Must be approved by Chase for a mortgage product, FICO 720+ Yes Yes
American Dream Down Payment Initiative
Best for low income
Up to $ 10,000 Income must be less than 80% of median area income, must be with a lender in an HUD-approved participating jurisdiction Yes Yes
Fannie Mae HFA Preferred Incentive Program
Best for foreclosures
Up to 3% of the home price Home must be a HomePath property Yes Yes


How to Select the Best First Time Home Buyer Grants

Finding and applying for scholarships may seem a chore, but it can pay off in the end by easing closing costs, down payment requests, and other fees and costs associated with buying a home. Here are a few things to consider when looking for funding.

  • Check the local, state, and state options: All of the grants listed above are available to individuals across the country, but there are many grants that are specific to the homebuyer location. So, in addition to the grants available nationwide, always look for grants that are specific to your city, county, and state.
  • Search for admission requirements: Most scholarships have at least some skill requirements, which can be based on your income, location, occupation, or other factors. Recognizing these early on can save you time and avoid applying for grants that you are not eligible for.
  • Note application deadlines: Many scholarships are awarded on a first come, first served basis, but others may be subject to a specific registration date. When applying for grants, it is helpful to determine whether a particular grant has a deadline and, if so, whether the deadline can take into account your expected date of purchase.
  • Keep track of important documents: Although each scholarship has a different application process, many will require you to submit documents related to your income, employment history, and property information. Applying will be easier if you have these documents to hand right away.


First Time Home Buyer Grants vs. First Time Home Buyer Loans

There are many specific programs for first time home buyers, including special grants and loans. While both can help you purchase your home, there are some important differences between the two. One of them is your repayment obligations after you receive the money. You don’t have to pay back the grant funds, but you do need to make regular payments on your mortgage.

Other differences between the two sources of funding are admission requirements and qualifications. Often times, when it comes to initial home buyer loans, the type of property is stated. For example, to qualify for an FHA loan, the property you intend to buy must meet minimum real estate standards. However, grants may not be tied to the same qualifications, and funding may be available whether or not you have an FHA or a conventional loan.

Because first-time home buyer loans and grants can vary by provider, it is important to thoroughly review all qualifications, requirements, and contracts before accepting funds or closing out any property.


frequently asked Questions

How do first-time home buyer grants work?

First-time home buyer grants offer eligible borrowers a specific amount of money, either a flat rate or a percentage of the down payment, closing cost, or property price. In many cases, the term “first time buyer” refers to anyone who has not bought a home in the past or has been married to an owner. In other words, if your spouse bought a house and you lived there, even if the house is not in your name, you are unlikely to be considered a first-time buyer.

It is important to note that not all scholarships are created equal and each provider has their own requirements, application process, and funding period. For more information on a specific home buyer initial grant, always contact the provider or check with a lender or real estate professional who can provide details of the grant.

Can first-time home buyer grants help pay off my mortgage?

Initial homebuyer grants can be used to make buying a home more affordable, but grant funds don’t usually go towards paying back the full mortgage. Instead, grant funds can be used to either reduce your entire mortgage or offset other costs related to buying a home, including closing costs, legal fees, inspections, and down payments.

If you’ve bought a property and are struggling with your mortgage, there are other ways to manage your monthly payment. For example, refinancing your mortgage can help you lower your payments by securing a lower interest rate or a longer repayment period. You can find more information about managing your mortgage here seven solutions for homeowners who are struggling with their mortgage.

Do Credit Scores Affect Who Will Receive First Time Home Buyer Grants?

Grant requirements vary depending on the grant administrator. Some grants, such as those offered by the National Homebuyers Fund or private banks such as Chase, have certain creditworthiness requirements. Other grants are based on different factors such as income, career history, occupation, etc. Therefore, credits can have an impact on who receives certain grants, but not all grants.


methodology

When analyzing initial home buyer grants, we first looked for grants that were available to homebuyers across the country. We then reviewed these grants to identify those who provided assistance for expenses such as down payments and closing costs. We have also considered the organization or body that administered the scholarship, the qualifications for receiving the scholarship, and any additional benefits and resources associated with the scholarship. Finally, we identified grants that provide assistance with specific demographics or with home purchase assistance in order to further narrow the pool of potential grants.