Buying a first home can be a stressful and frustrating experience. Assistance is available to help ease this process for those who qualify, however. National and state programs can offer grants to buy a home, mortgage interest rate guarantees and down payment assistance. These come in the form of first-time home buyer grants, grants to buy a home in rural areas and even grants to help you repair or make energy-use improvements to your new home.
USDA Rural Development Home Buyer Grants and Loans
Single Family Housing Programs offered through the United States Department of Agriculture Rural Development Initiative provide homeownership opportunities to low- and moderate-income rural Americans through several loan, home-buying grants and loan guarantee programs. The programs also make funding and grants available to individuals to finance vital improvements to make their homes decent, safe and sanitary. Some of these programs are the best home buyer grants available.
Programs under the direction of the USDA Rural Development include these:
- Rural Housing Guaranteed Loan: This program provides 100-percent financing opportunities to individuals and families in rural areas to allow them to purchase dwellings.
- Rural Housing Direct Loan: Section 502 loans primarily help low-income individuals or households purchase a home.
- Rural Repair and Rehabilitation Loan and Grant: The Very Low-Income Housing Repair program provides loans and grants to very low-income homeowners to repair, improve or modernize their dwellings or to remove health and safety hazards.
- Self-Help Technical Assistance Grant: This program provides financial assistance to qualified nonprofit organizations and public bodies that aid needy very low- and low-income individuals and their families build homes in rural areas by the self-help method.
- Technical and Supervisory Assistance Grants: These grants assist low-income rural families in obtaining adequate housing to meet their familys' needs and/or to provide the necessary guidance to promote their continued occupancy of already-adequate housing.
State Programs and Grants
Most states also offer their residents down payment assistance in the form of home buyer grants, meaning applicants do not need to repay any monetary assistance they receive.
For example, the California Homebuyer's Downpayment Assistance Program offers a deferred-payment subordinate loan for 3 percent of the purchase price or appraised value, whichever is less, to qualified buyers for down payment and/or closing costs.
Most state programs require benefit recipients to qualify under income guidelines and take homeowner education classes. Some require other stipulations as well, so it's always a good idea to determine if these programs are right for you by contacting the state or local agency administering the assistance.
Private Sector Assistance
A significant way you can save on the substantial expenses of buying your first home is to be sure to enlist the services of an independent insurance agent who can help you find ways to save on your homeowners insurance premium. This is an often overlooked expense of owning a home for many first timers, and for many, they don't have the option to not cover their home with an insurance policy. If you purchased your first home with a VA or FHA loan, which many first-time home buyers do, you will be required to carry and insurance policy to cover your home's value. Many private banks and lenders also require you to cover your home with insurance.
Independent insurance agents on the Trusted Choice network can find you a number of home insurance quotes from a variety of insurance providers, enabling you to purchase a policy with the best coverage at the lowest possible rates. When you find a home you love, be sure to contact a Trusted Choice agent who can help you cover it with a policy that fits your budget.
Perhaps the best-known private sector assistance program for home buyers is Habitat for Humanity. With a presence in all 50 states and in dozens of countries, this international nonprofit has helped millions across the globe find affordable housing.
Families chosen for Habitat homes can purchase a simple, well-built house at no profit to anyone. Essentially, these families are getting grants to buy a home. Habitat will give eligible buyers a 15- to 30-year mortgage at zero interest. After you move into your home, Habitat will remain your partner and give you financial counseling, house maintenance education, and other help if you need it.
According to the organization's website, applicants must meet several qualifications to ensure success. Each Habitat affiliate has its own guidelines. In general, prospective homeowners must meet these conditions:
- Be citizens or legal residents
- Prove steady income
- Have good credit
- Earn a monthly income that falls within minimum and maximum limits, for your area depending on household size
- Sustain a savings account over a specified period of time
- In addition, each partner family will be required to do the following:
- Invest "sweat equity" hours in building their home and others
- Make an affordable down paymentMake timely mortgage payments
- Attend homeowner education classes
To find out more about this program, contact a Habitat for Humanity affiliate in your state or county.