Understanding the grants for first time home buyers
For those planning to buy a house but struggling with the obstacle of a down payment, especially those from either a middle-income or low-income household, can look into the option of securing a first-time homeowner grant. Saving money when you have a regular list of things to pay for including rent, utilities, grocery, car ownership, etc., can be highly improbable. Under these circumstances, the only economically feasible option would be to get a homeowner grant and buy a house without a down-payment.
What are first-time homeowner grants?
These grants take care of the down payment requirement by working in combination with low-down-payment mortgages, through which an aspiring homeowner can buy a house without an actual down-payment as well as take care of the first mortgage payment.
In general, a down payment of about 3.5% of the total cost of a home has to be prepaid in an FHA mortgage. In some cases of mortgage grants, a 3% down-payment may be allowed. However, first-time homeowner grants remove this down payment option.
These grants are mostly available only for first-time homebuyers, and only for those homes that will be owner-occupied upon purchase. However, there are certain lending institutions that define this criterion as an individual who has not owned any form of a home in the past three years. There is also the restriction that these grants would be unavailable for those looking for an investment property or looking to buy a second home.
Facts about grants for first-time homeowners
- These grant amounts are capped at a certain limit.
- The first-time homeowner grants are only available to individuals whose income is below a certain median. This median is determined based on the geographic-income profile of the place of residence.
- There are lenders in the market who allow for a certain percentage beyond the income median but may have their own set of other criteria to be adhered to for getting the grant.
- One criterion to get the grant would be to attend a prescribed homebuyer course, either through a contact class or an online program.
