Lifestyle   Money
By Consumer Team | 26 Sept. 2018

What You Need to Know About First Time Home Buyer Grants

first time home buyer grants

The joy of home ownership is often reduced to a mere dream for some would-be buyers. Even with a stable and substantial income coupled with an impressive credit report, some consumers are shut out from the real estate market because of their inability to come up with the down payment and other hidden fees.

A down payment can be anywhere from 3 to 20 percent of the asking price. Would-be buyers still must fulfill the terms of their financial obligations even after being pre-approved for a home loan. In many cases, first-time buyers would be capable of comfortably living in the home of their dreams if they had a bit of help with the down payment. First time home buyer grants were created to make it easier for people to cover the costs of the down payment and finally become homeowners.

What is a First Time Home Buyer Grant?

A first time home buyer grant is financing that offers consumers who are purchasing a single-family home for the first time the relief of having their down payment and some closing costs covered by an advance.

The average home that costs $300,000 requires a down payment of about $10,000. A first time home buyer grant would cover that amount so that you, the first-time home buyer, can focus on other things such as moving costs and setting up utilities in your new home. In some instances, first-time home buyer grants pay for repairs and necessary renovations so that buyers do not feel immediately overwhelmed by their new real estate purchase.

How Does a First Time Home Buyer Grant Work?

The key to home buyer grants is the status of buyers as first-time homeowners. In many cases, you can only be approved for funding if you have never owned real estate before. Grants are also reserved only for those applicants who plan to reside in the home. You cannot use the funding for investment property.

The average first time home buyer grant works within the bounds of strict income and location requirements. Some advances are only available to individuals living in certain cities or counties. Other grants are reserved only for those whose income falls within a certain range. The value of the home you are purchasing also matters as the grant amount you are approved for typically does not exceed four percent of the asking price.

It is important to remember that first-time home buyer grants do not automatically come with mortgage approval. You must qualify for the separate funding option as well, which means that you should be prepared to furnish proof of income and other pertinent information for approval.

How Can You Find First-Time Home Buyer Grants?

The best way to search for home buyer grants is by going to your local government’s resource page online. The Federal Housing Administration (FHA) is a great place to start looking for funding. The website also indicates where you can find first-time homebuyer mortgages that come with low interest rates.

How Much Do First-Time Home Buyer Grants Cost?

Generally speaking, a grant is funding that need not be repaid. Hence, the average first time home buyer grant comes at no cost to the recipient. There are, however, instances where a “grant” acts more as a loan than free money. In such cases, the recipient is required to repay a portion of the funds at a low monthly cost. Still, even with a repayment plan, the first time home buyer grant is more convenient than having to pay thousands of dollars from your checking or savings account all at once.

You should not let your inability to afford the down payment and closing costs of real estate property deter you from owning your own home. Take full advantage of first-time home buyer grants in your region.