When it's time to buy your first house, there are a lot of things to stress about. You may have heard that there are government grants you can get, that will help with your downpayment. Find out the truth here.
Buying your first home can be an exciting and stressful time. First you have to figure out how much of a mortgage payment you can afford, to determine how much you should spend on the house. You have to save up the money for a downpayment, and you have to qualify for a loan, and you have to find a house that you like within your budget.
And you may have heard that there are government grants available to help with your downpayment. Some sites claim that you can get up to $15,000 toward your downpayment, and they make it sound easy. Just apply, and voila! You have been given a whole lot of money toward buying your first house!
Unfortunately, the truth is not so happy. The federal government does try to encourage homeownership, and it does have several programs aimed at helping a new homeowner get into his first house, but the government does not just have money lying around that it gives out to anyone who asks for it.
Federal Government Programs
If you search grants.gov, which is the official federal government database of all grants available to individuals and organizations, you will not find any under the category of Housing that offer money to individuals. There just aren't any, despite what other websites may claim.
The US Department of Housing and Urban Development (also known as HUD) gives grants to organizations and groups, not to individuals, and the grants that it bestows generally have a very specific purpose. Individuals wanting to buy a residence do not qualify.
So the federal government does not provide money directly to individuals, but it does provide money to state and local governments, which in turn have their own programs for assisting in home ownership. These programs vary from state to state, so you need to conduct research for the particular state where you live or where you are trying to buy a home.
State Programs
Some states provide downpayment assistance programs, from outright grants to low- or no-interest loans.
Some non-profit organizations are chartered to promote home ownership, and they have various programs that can help.
There is a Mortgage Credit Certificate program, which you apply for through your lender, which gives you a credit on your income taxes to help with your downpayment and expenses.
And there are a number of loan programs that may help first-time home borrowers, especially the ones administered by the FHA (Federal Housing Authority).
If you qualify for an FHA loan, you will probably be offered a lower interest rate and will have to put up a far smaller downpayment than if you obtained a mortgage through a private lender.
Where to Get More Information
There are many websites out there that provide helpful information about where and how to obtain information about buying your first house. The first stop on your list should be your state's housing authority website.
You can also discuss your search and discuss information at Free Grants Community, where other people who are also looking to buy their first homes can share their tips and experience.
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