You’ve heard the promises—are they for real? There are plenty of sites that want you to believe that for a “small” fee, they can help you find any kind of funding you might need — complete with a guarantee!
The simple truth is that the government would love to encourage home ownership. However, they are not just giving out grants to accomplish that goal. And unless you are over age 62, living in a very rural area and meet a number of other uncommon criteria, there are no direct government grants available to help you buy a home. You need to understand that to avoid getting scammed.
Don’t give up — there is hope! Home buying assistance includes counseling on a number of topics, special programs specific to your state, free help avoiding foreclosure, low interest loans and payment plans and more. Learn more below, beginning with new very low down payment opportunities!
Remember as you consider options that no one can guarantee you can get a government grant to purchase your home. Don’t let wishful thinking let you fall for empty promises. See Grants For Home Repair as an alternative to purchasing a new home - maybe you can hang on for a bit longer before moving.
Discover your program today!
Update October 2019
Help is here for those wishing to purchase a condominium and needing help with their down payment. The Trump administration has made it easier for first time buyers by relaxing the financial requirements for home loans specifically for condominiums. These new rules lower credit score requirements and will allow more FHA backed loans. That means that down payments of just 3.5% would be required. And since condos are typically more affordable to start with, the overall affordability of such homes will be greatly improved, especially in very pricey areas where many have been locked out of the housing market.
News July 2018 Wow, there are a number of new programs out there to help you get into that home you’ve been dreaming about. Did you know that there’s now a crowdfunding site that is dedicated to helping people raise money to buy their home? It’s called HomeFundMe and it’s worked for a number of people who have learned of it through their real estate broker. You just put your online profile on the site and let your friends and family all know abut it. Who knows, could work for you! If you are willing to buy a house with an extra room or suite and agree to airbnb it for a specified number of years and share the income, you could get help from a company called Loftium. They offer up to $50,000 if you agree to their terms about renting out a room. And some banks will require zero down if your parents will agree to pledge some of their investments as collateral. Great food for thought — get busy with that HomeFundMe signup …
Update August 2017: Don’t neglect to check out the programs offered by your state! There are so many of them it’s hard to keep track but the effort is worth it. For example, if you’re still burdened with student debt and can’t imagine how to even consider buying a house, you might want to rethink that. For example, in Maryland threes a “Smart Buy Program” that makes home buying significantly easier. Maryland will provide a second mortgage in an amount at or below 15% of the purchase price of the house. This loan will be zero-interest and not have any monthly payments — instead it will be used to pay off your student debt! And, rather amazingly, Maryland will “forgive” 20% of the loan every year you stay in the house …. so in five years your student debt could be gone —- and you own a house!
If you’re frustrated because you don’t qualify for the few national programs available, don’t give up. States and some local agencies receive block grants from the federal government to help people buy their first home. Individual counties design their own programs based on their knowledge of the local area. So rather than look to the federal government for assistance it is often a better idea to look close to home. If you have a relationship with a bank or have found a mortgage provider you can work with, they should have excellent knowledge of their area and what programs exist to provide financial assistance to home buyers.
Update August 2016 As you look for legitimate information that can assist you in finding resources to buy a home please beware of those who claim to help but don't. We recently ran across a site called usagrantapplication.org and were surprised to see their claims that you could just fill out an application and get grant money to buy. They have an F rating from the Better Business Bureau and we found complaints elsewhere on the internet. We know getting a grant is not that easy. That's why we provide lots of information about what's real and what's not and what you actually have to do to find real grants or other aid programs.
Now a note of warning. If you're tempted by ads that claim they will lead you right to lots of money to help you buy a home, be very careful. Sites like usafunding compare the money that's out there to winning the lottery. Then they say just register – and pay the fee – and they'll help you out. They don't have any secret sources that aren't available to everyone so hang on to your money. And read on to see where you can find financial help to buy a home:
Even though there may not be lots of homes on the market right now, and prices have gone up, there still is hope for those dreaming of owning their own home. Programs available to help would-be buyers are not just for those with low incomes. Some are aimed at people who have decent incomes but don’t have enough to come up with the required down payment. The most promising place to look for help is your own state or county — especially if you live in a particularly expensive area. For example in some places in California people with incomes as high as $102,000 can qualify for assistance. Some banks, like Wells Fargo, have assistance programs available with grants of up to $15,000. And in some areas special programs are available for recent college graduates.
Update July 2017
Did you know that you can still get some of those 3% down mortgages on a new home? Both Fannie Mae and Freddie Mac have their own versions with slight differences that are important to understand. Fannie Mae has one that is specifically for first time buyers and you don’t have to go to any educational classes to qualify. There is another version you can get in low income areas and these do require classes. Check with your bank to see if they are offering these loans, 3% is an amazingly low down payment that is much more possible to come up with than standard mortgage loans!
News January 2016 The Wall Street Journal reports that home sales to first time home buyers fell in 2015 to it's lowest level in almost 30 years. While some say that young people are being “left out” of the housing market recovery, many young people report little interest in buying a home. Still, based on recent surveys it's clear that many people over-estimate what it would take to get them into a home and don't even investigate their options. Most people believe that you have to come up with at least 16% down to by a home, and that is far from true. Many are not aware of very favorable programs available today — they make it possible to buy a home for as little as 3% down! Take a look at the opportunities you could take advantage of:
News October 2015: Think daily news about bond prices and interest rates don't apply to you? Think again! Today's economic news includes a report that government bonds “pulled back.” Doesn't sound like it has much to do with you but look closer. The reason for the pull back is an increase in new housing starts – well above economists' forecasts. That means the home buying market is looking good and people are looking for houses. It also means that the competition for new houses will increase — and eventually interest rates will too. So take a look at the deals and details available and make your dream of a new home come true. And if you are a first time buyer, also see Grants for First Time Homebuyers!
News: Freddie Mac and Fannie Mae (government-backed mortgage giants which provide mortgage money to lenders and also buy mortgages from them) have announced that effective March 23 of 2015 qualified buyers can get a home with a conforming, conventional fixed rate loan for 15, 20 or 30 year mortgages for just 3% down. That could be a huge break for potential buyers with decent credit (minimum score 620) who can document their income and employment. It's called the Home Possible Advantage program, check it out with a lender near you! Combine this program with financial assistance your state probably offers to mid-low income buyers and you'll be a homeowner before you know it! See the last section in this article for more state information.
Following are several types of free home-buying assistance available depending on your situation. (Be sure to also check out our June 2014 Newsletter with more tips and new programs for getting into a new home.)
The Energy Efficient Mortgage (EEM) The Energy Efficient Mortgage is another way homebuyers can get help from the government in order to buy a house. Because lower energy bills mean you have more cash, energy saving improvements can be included in the amount of your mortgage — meaning you don’t have to pay for them right away, they’re financed over the life of the loan. The theory is that you can then afford a better home — because you will qualify for a larger loan. The value of your new home should also increase due to it being more environmentally friendly. You must first get a Home Energy Assessment, which your lender should be able to explain to you and refer you to a qualified home energy assessor. And it’s not just for buyers — you could also refinance your home to make energy saving improvements.
Neighborhood Stabilization Program Grants This program was created to help neighborhoods that have a lot of homes that were abandoned or foreclosed. The resulting neglect drags down the appearance and value of the surrounding neighborhood. Through NSP Grants, people who otherwise could not afford to buy a house can receive assistance to do so. When new owners move in and fix up a property the entire community benefits.
NSP Grants are provided by the Department of Housing and Urban Development. They do not go directly to individuals. Like most federal grants, they go to state and local agencies and to some non-profits which then manage and distribute the funds. If you want to get involved with this program you need to find what “NSP Grantee” is in charge of the program in your local area. You can do that by going online to hudexchange.info. Click on the phrase “About Grantees” near the top of the page. On the next screen look under the category “View Organization by Program” and select “NSP” and then click “Find by Program.” That will take you to an alphabetical list where you can look for your city, county or state. Click on any of those to get a list of organizations and contact information.
More HUD Assistance The Department of Housing and Urban Development is a huge federal agency. However they’ve done a good job of moving their programs and assistance down to the local level. And there are resources to help you find them. On the HUD website you can get some basic information about things you should do if you are considering buying a home — and they give you details about each subject. Examples include how to figure out what you can afford to spend for a house, what your rights are, how to shop for a loan and more. Most importantly they direct you to information about what home buying programs are available in your state. This guide is critical because programs vary significantly from state to state. To find it just go to the main page of hud.gov and under “I want to” click “buy a home”.
Housing Counseling is readily available from agencies all over the country. Provided by the U. S. Government’s Department of Housing and Urban Development (HUD), these agencies offer a wide range of information and advice at little or no cost. HUD programs go beyond just guaranteed or lower cost loans. Special programs exist that can help police, teachers and firefighters find homes at 50% off list price! Other programs help non-profits buy specific HUD houses. To find the agency closest to you, you can search online or call HUD toll free at 1-800-569-4287. There are no fees for housing counseling for the homeless. If any fees do apply to you, they will be minimal and the counselor must explain them to you up front. If you are a single mom trying to keep your family together also see our article Grants for Single Moms.
Help Avoiding Foreclosure If you are in danger of losing your home and you don’t know where to turn, HUD also offers specialized counseling in Foreclosure Avoidance. Search the list online on HUD’s website to find a counselor. Foreclosure Avoidance counseling is free of charge to anyone who needs it. And see our December 2012 Newsletter for information about the Independent Foreclosure Review Program if you went through the foreclosure process in 2009 or 2010 and feel you were mistreated. And there's news: the HARP program is now easier to qualify for! If you've been turned down in the past, check it out now. The program is ending in December 2015 so take action now — see our new article about assistance for HARP eligibility!
Special Loan Programs
You can’t easily get a grant to buy a home but you may qualify for a better deal through the FHA (Federal Housing Authority). They are the largest insurer of home mortgages in the world, and their guarantee can help you obtain a lower interest rate as well as less required as a down payment. Any reputable lender can help you determine if you qualify for such a loan. You can also find more information on the FHA’s website. If you are trying to buy your first home, check out our article about grants for first-time home buyers.
Also check out our article about Grants For Housing. In addition to Rental Housing Assistance it also describes some special purchase programs available from the USDA.
Charitable Organizations You may have heard about Habitat for Humanity, the organization that helps low income families build a new home. It’s a terrific service that helps eligible families without regard to race or religion. And they provide assistance not only with the house itself but also by helping families understand what’s involved in home ownership, how to manage their finances, understanding mortgages and more. There is a qualifying process for families to be considered. Qualifications include having a serous need for better housing; being willing to pitch in and help build their home as well as helping other families; taking classes relevant to home ownership; and the ability to pay for a reasonable mortgage. You can learn more at habitat.org.
Information Specific to Your State In addition to federal agencies like HUD and the FHA, individual states provide lots of resources as well. They can help you find free or low-cost counseling, provide information and training regarding lenders as well as about purchasing and maintaining a home. Some also help you get financial assistance to purchase or make repairs to you home. If you live in California, Florida, Illinois, New York or Texas just click the name of the state and see our articles about specific financial help available there. And check back often as we add new states regularly. And for any state a simple internet search using the words “homeownership assistance” and the name of your state will get you to a website where you can get more information.