First time buyers may apply for down payment assistance, which is meant for those, who find it difficult to purchase their first home. Read on to know more about this provision.
There are various grant programs that are meant to assist first time home buyers. These grant programs can help you financially in making down payments or closing costs or by reducing the mortgage loan rates. It has been observed that most of the prospective house buyers find it difficult to secure a home loan, as they may not be able to procure the amount required for down payment on a house. In such cases, you may apply for down payment assistance for first time buyers.
Such grant programs are offered by both the government and other non-profit organizations. Even some banks have come up with different schemes to help first time home buyers. However, you have to fit into a certain criteria, in order to qualify for such down payment assistance programs. This article deals with the government’s down payment grant program that comes under the American Dream Down Payment Act.
Eligibility Criteria for Down Payment Assistance Grants
The American Dream Down Payment Act was passed in 2003 and since then, this grant program has assisted thousands with down payments and closing costs. This program is administered by the U.S. Department of Housing and Urban Development (HUD).
- In order to qualify for such down payment assistance, the applicant has to be a first time buyer.
- A first time home buyer is a person, who has not owned a house for three years prior to the date of application for the grant.
- It is also applicable for a single parent or a displaced homemaker, who has not owned a house single-handedly.
- A person, who has owned a home not attached to a permanent foundation can also apply.
- An owner of a home that is not built on compliance with the building codes can also make an application for this grant.
Even income restrictions are applicable for the applicants of these first time home buyer grants. As the eligibility criteria regarding the income limits can vary from one state to another, it will be better to get a basic idea about the concerned rules in your region.
Other Terms and Conditions
Now, you have a basic idea about the eligibility criteria, as far as down payment assistance for first time home buyers are concerned. The above mentioned American Dream Down Payment Act too has various terms and conditions. These clauses may differ from one applicant to another and are decided on the basis of his/her individual needs. In some cases, the down payment assistance for first time home buyers will be like 0% interest mortgage loans for a term of 5 to 15 years. Some of the applicants are required to put 1% of the purchase price, along with the amount granted by the government as grants.
The applicant may have to pay back the grant received, if he sells the house within a period of five years. However, this clause may expire within a few years, if the grant is allowed on such terms. Such grants may also require a FHA loan in some cases. So, you have to get a basic idea about the requirements and terms and conditions of these government schemes that provide down payment assistance for first time buyers, before applying for the same. Apart from the government scheme, there are various other such schemes offered by non-profit organizations and lending institutions. So, conduct an inquiry about such schemes in your state and understand them well, before applying for any of them. It is always advisable to seek the opinion of an expert, for more information about such programs.