Use Free Government Grants for First Time Home Buyers to Buy Your New Home

People who want to buy a home can face an uphill challenge in the form of paperwork and financial terms and conditions. Small fees and costs suddenly begin to add up and one starts to wonder whether all this trouble is worth owning a home.

For most of the people, saving the money to make the down payment of 20% is the first significant hurdle in this home buying plan. But you, as a home buyer, have several first-time home buyers grant programs. All you need to do is choose the one that suits lifestyle and make the down payments as little as 3% or so…and walk into your new home. You can even secure a grant if you are a first time home buyer with bad credit.

Types of Grants for First Time Home Buyer

The US Department of Housing and Urban Development (HUD) does not hand out money directly to the citizen of the country. So where does one get government grants for first time home buyers?

  1. Fannie Mae – Freddie Mac Option: Both Fannie Mae and Freddie Mac offer loans and grants for first time home buyers. They first check the creditworthiness of the borrower. These are people who cannot make the huge down payment plus the costs of closing the deal. Yet, they can make mortgage payments. Fannie Mae and Freddie Mac check the credit worthiness using their underwriting system. They include the costs incurred for the checking to the total cost. The FHFA watches the action of the house owners towards repaying the loan.

Fannie Mae’s My Community Mortgage remains available for users through its desktop underwriting tool. Some years before, Fannie Mae had a 97% LTV program and the experience is had with the first-time home buyer grant program makes it confident of the future. Click here to learn about first time home buyer down payment assistance.

Freddie Mac came into the scene later after doing a lot of groundwork. Freddie Mac makes the first-time home buyers grants available to new would-be owners and others as well. The new house owners must take part in an education program.

  1. Federal Housing Administration 203(k): Under this first-time home buyer federal grant scheme, the homeowner and the home buyer can use up to $35,000 money in the mortgage if they need to make improvements to their home. These improvements and property repairs need the approval of an FHA appraiser. This allows the homeowners to make their home ready for sale by modernizing it.

These activities may include one or more of the following things:

  1.   Eliminating hazards to safety and health.
  2.   Doing reconstruction and alterations to the structure.
  3.   Enhancing accessibility options for disable persons.
  4.   Doing floor treatments – adding or changing floors.
  5.   Change the landscaping.
  6.   Installation of a well.
  7.   Installing a sewer system.
  8.   Replacing the plumbing or reconditioning it.
  9.   Make improvements to the home function.
  10.   Do improvements for energy conservation.
  11.   Make site improvement work.
  12.   Replace or add the downspout, gutters, and roofing.
  13.   Make changes to remove obsolescence or improve appearance.

This kind of rehabilitation covered by the Section 203(k) may range from something minor (but exceeding $5,000) to full-scale rebuilding of the house. Thus, you can demolish and raze a house to the ground but it must keep its original foundation. Many rules that apply to the basic Gov first time home buyer grant product of FHA under Section 203(b) remains applied here. This makes the single-family mortgage insurance product attractive for the lower-income group.

  1. USDA loan: This is a surprise because it is not just farmers who qualify for the first-time home buyer grant programs. The Rural Development Program under the Department of Agriculture has set aside billions of dollars to help people have a home. You might end up paying only 1% if you come under the low-income bracket. You could also become eligible for home improvement loans. Since you need not own a farm to become eligible, people with a credit score of 620 automatically start to get streamlined processing of the first-time home buyer down payment grant. Learn more about first time home buyer loans here.
  2. First time home buyer Programs: You have more than 2000 home buyer programs if you care to look. Home buyers must check this grant for first time home buyers programs before they do anything else.

Home ownership programs are loan packages for buying a house. You get grants, tax credits, and similar things to help the homeowner reach the down payment needed. The following agencies and institutions offer them:

  1. Housing authorities
  2. Employers
  3. City and county programs
  4. Non-profit organizations
  5. State House Financing Authority (HFA)

The eligibility criteria for getting these federal grants for first time home buyers are that the house and the buyer must qualify under the scheme. That is the home buyer must qualify as a first-time home buyer.  He or she must not have had a house in three years. Only those home buyers who plan to use the house as their primary residence qualify for the home ownership programs.

How do you get first-time home buyers grant?

The buyer must invest. They should become eligible for the first mortgage. Now, they must undergo home buyer education. Other eligibility factors include home ownership history, home buyer income, and sales price of the home.

  1. Down payment program: One gets many advantages under this program. These include 0% interest, forgivable loans, and deferred payments. The programs are soft second mortgages or even third mortgages. The loan amounts amount to a couple of thousand dollars. You can use this amount for repairs, principal reductions, prepaid, and closing costs. Apart from this, you can become eligible for first time home buyer closing cost grants.

The benefits from the HUD first time home buyer grant and the eligibility requirements will vary as per the home prices and median income of the area. So, if you take a home in the target area allotted by the HFA, you become eligible for higher amounts of help. The income requirements become more lenient and they might waive the first-time home buyer need.

  1. Mortgage Credit Certificate (MCC): First-time home buyers can offset part of their mortgage interest on another new mortgage to help qualify for a new loan. To do this, the mortgage lenders use this income tax credit every month as more income. This kind of mortgage credit varies from state to state but the IRS caps the greatest amount at $2,000 per year. Learn more about first time home buyer tax credit here.
  2. FHA loan: The first thing to know is that the Federal Housing Administration does not give loans. It merely insures loans given by private lender. The lender is now FHA approved lender for the first-time home buyer grants Louisiana. So, first time home buyer grants, Louisiana need to check the rates and interests from several lenders and mortgage brokers and make comparisons. In the first place, they need to make sure that the loan giver is FHA approved. Further, the buyers need to have a FICO score of at least 610. If not, the mortgage rates will become higher.

Here are some tips for secure your first-time home buyer grants.

First, prepare yourself.  This means you read the qualifications and requirements. Here is the list of requirements.

  1. The income is less than $99,000. This is the joint income of all the people in the household. Once you meet this go to the next step.
  2. Select an appropriate lender. Arrange to meet with the lender. This is the first step to becoming pre-qualified.

You should fill in the loan application. Once this is through, you are pre-qualified.

  1. Select the real estate agent. The realtor will help you find the house you need. You must sign the purchase order for the house you select. Then, return to the lender so that you can secure the loan.
  2. Get the funds reserved. The lender does this. He or she will reserve the funds with the LHC and go over and complete all the documentation needed starting from the application to the loan closing.
  3. Good Neighbor Next Door: This is a list of the federal first time home buyer grant by the FHA to help build more home ownership. The reason you need to buy through HUD is that you get cheap homes. The HUD home is one that has become HUD property due to the foreclosure action. These residential homes have one to four units. HUD sells these properties to recover the loss they acquired on the foreclosure claim.

Do you qualify to buy a HUD home? Yes, if you have the money or qualify for a loan to raise the money to pay for the house. The first lot of houses remains offered to owner-occupants. This means that the people buy the house to make it their primary residence. Once the waiting period is over for the owner-occupants, the next lot of unsold houses comes to everyone including brokers.

The first thing the home buyer must do to get the grants to help first time home buyers is to arrange for a professional home inspector to go over the house. HUD does not guarantee anything about the way the house is. The new owner must make all the needed repairs, and so assessing the house is important.

Buying a house that needs repairs is fine since you can apply for and get an FHA 203(k) Rehabilitation Loan. The needed steps will be like this:

  1.   The home buyer gets financing to buy the house.
  2.   He then gets more financing to do the rehabilitation construction.
  3.   Now, he arranges for the mortgage after they complete the work to pay off all the debts with a permanent mortgage.

The acquisition and construction loans are for short term and have huge interest rates. To overcome this, the FHA 203(k) Rehabilitation Loan offers just one mortgage loan with which the home buyer can finance both the acquisition and construction. This is long-term fixed rate loan and so the home buyer is not burdened.

HUD does not give financing. The home buyer must arrange the money from their own reserves or through a mortgage lender. It is better if you find an FHA-insured mortgage for arranging your finance.

Once HUD gets any single-family property, FHA will put up a sign showing who is managing the property. Once they resolve the title issues, they will check whether the property qualifies for the discount sales program. Then, they list the property on the HUD Home Store website.

Obama first time home buyer grant

Home Buyer Assistance and Improvement Act 2010 otherwise known as the Obama First Time Home Buyer Grant is a law for improving the housing sector by giving help for first-time home buyers. The credit the home buyer can get under this law is subject to an upper limit of $8,000. The home buyer should not have an income greater than $125,000 if he or she is single or $225,000 if married.

First Time Grants for home owners with no credit score

The automated underwriting process of Fannie Mae is seeing one more change when applied to borrowers with no credit score. When you have no customary credit, it means one must go through the manual approval process. But, Fannie Mae is allowing borrowers without credit score to give their loan applications through its automated process which lenders prefer much. The guidance for getting grants first time home buyer is as follows:

  1. The home must remain that of a single family. You cannot have manufactured homes here.
  2. The borrower must use the place as their principal place of residence.
  3. They must have 39% or lesser debt-to-income ratio.
  4. The ratio of the loan-to-value must not exceed 90%.
  5. Always the mortgage must remain fixed-rate.
  6. The loan must stay as limited cash-out refinance or for buying.

Once you do this, you need to give the lender proof of credit history. This should stay something non-traditional such as a utility bill, child-care costs, or payment of life insurance premiums. The second one must stay as a payment history of housing rentals.

Here are three statewide and regional first-time home buyer government grants for residents of Louisiana.

  1.   Habitat for Humanity
  2.   Louisiana Housing Corporation (LHC)
  3.   U.S. Department of Agriculture Rural Housing

Let us see the details of how to get a first-time home buyers grant through the LHC Preferred Conventional Program. Through this program, you get a higher loan-to-value compared to the FHA program. You do not have to pay the premium for mortgage insurance upfront. And it has higher limits for income.

  •        The rate remains fixed and lasts for 30 years.
  •        The greatest income limit remains fixed at $99,000.
  •        You can get a maximum loan amount of $417,000.
  •        You can use this amount to buy a Single-Family housing.
  •        The property must remain in Louisiana (for the LHC plan).
  •        Credit score must remain at least 640.

The benefits of the program will include you do not have to remain as a first-time home buyer to qualify for the loan. You do not have to pay origination or discount fees. You can get up to 4% help on to use for down payment, closing costs, and other prepaid items. And, you do not have any more bond documents. You get the mortgage interests at reduced rates.

Home Buyers facts about Louisiana

  • The cost of living in Louisiana is 20% lower than the national average.
  • In Louisiana, the median cost of a home is $145,200.
  • Public schools in Louisiana spend $11,840 per student. The average expenses for school education in the U.S. is $12,383.
  • You have 34% renters in Louisiana.
  • The 2-bedroom housing wage is $15.81.
  • The tallest state capitol building in the US is in Louisiana. It has 34 floors and stands 450 feet tall.
  • They celebrate Mardi Gras, a fun festival just before Lent in New Orleans.
  • The name Louisiana is in honor of King Louis XIV.
  • The world’s largest room unobstructed by posts is The Superdome in New Orleans.
  • Breaux Bridge is the crawfish capital of the world.

First time home buyer grants Illinois, Chicago

Chicago is the hometown of Obama. Here are some facts about this town.

  • More than half of the households in Chicago are rentals. The number of homeownerships is rising but the rentals hold sway now.
  • Fair Market Rent for a one-bedroom house in Chicago is $711 as per HUD.
  • There is a shortage of rental housing for people who can afford them in the income bracket up to $20,000.
  • The median income for a family of four in the Chicagoland area is $70,500.
  • You have six newspapers serving the city of Chicago.