Gov. Housing Assistance Could Mean Free Money to Buy or Rent a Home

Homebuyer grants can be the key to being a homeowner for many Americans. The government has 1st time homebuyer assistance programs and favorable mortgages if you want to buy another home. You may be able to find down payment and closing cost assistance programs that help make the initial cost more affordable. 

Government backed mortgage loans tend to have lower interest rates and more lenient requirements, like lesser down payment minimums. You could get a good interest rate, even if you have bad credit. Learn more about the government programs that offer free money and reasonable mortgages. 

Down Payment Assistance Programs May Offer Grants & Interest-Free Loans
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A down payment is one of the largest upfront expenses when purchasing a home. Conventional mortgages often require a down payment of around 20 percent of the purchase price. With much higher home prices in recent years, a double-digit down payment could equal tens of thousands of dollars. 

Fortunately, down payment assistance can lower the amount you need to pay upfront to get your new home or second mortgage. Some down payment assistance programs: 

  • Reduce the standard requirement of 20 percent. For example, you may only need to come up with 3 percent or less.
  • Give money in the form of a grant, such as paying the minimum down payment requirement on your behalf. 
  • Provide a “piggybacking” loan, which is a separate loan or line of credit for the down payment. 
  • Offer forgivable loans that you do not have to repay as long as you meet the conditions, like living in the home for a minimum number of years.
  • Have deferred-payment loans that you do not have to repay until you sell or refinance your home or pay off your mortgage.

If you need closing cost assistance to cover more than just your down payment, the lender may roll additional expenses into your mortgage, down payment loan, or grant disbursement. For instance, you may need to pay for a home appraisal, wire transfer, or title services. Not including the down payment, your closing costs may be an additional 3 to 6 percent of the purchase price.    

Most down payment assistance grants are aimed toward first-time homebuyers. Mortgage lenders with down payment assistance may consider you a first-time buyer if you meet one of the following criteria:

  • You never bought a home before 
  • You have not owned a home in three or more years
  • You are buying in a special target area
  • You are an honorably discharged or re-enlisted veteran or spouse 

Homebuyer education is often a condition to get 1st time homebuyer assistance from state or federal programs, as the course curriculum may help you avoid foreclosure and other homeowner problems.  

You can also find home down payment assistance based on your income, military status, age, and other factors. For instance, some private lenders offer home down payment assistance for veterans that waive down payment requirements.

Likewise, the Department of Veterans Affairs (VA) insures loans for certain qualified military service members, so lenders can offer better mortgage terms. VA home loan down payment assistance reduces the requirement to zero percent. 

A great place to find mortgage lenders that offer down payment assistance is with the Housing Finance Authority (HFA) in your state. The government backs loans for civilians through:

  • The Federal Housing Administration (FDA). Depending on your credit score, an FHA-backed home loan can have a down payment minimum of between 3.5 and 10 percent. 
  • The U.S. Department of Housing and Urban Development (HUD).
  • The U.S. Department of Agriculture (USDA). USDA-backed loans may not have a down payment if you live in a rural area and have a low income. 
  • State agencies and programs. Benefits and requirements vary by area. 
  • Freddie Mac and Fannie Mae. 

The government and other entities have grants that could lower your new home’s total purchase price. Find out where to apply for financial assistance to make homeownership more affordable. 

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By Admin