Government grants for first-time home buyers provide financial support for people purchasing a home. Financial support typically covers down payment costs, closing costs, or a reduction in mortgage loan interest rates. Some programs are available only to low-income households, while others provide support for buyers choosing property in developing areas.
In the United States, the American Dream Down Payment Act provides money to state and local housing authorities for qualifying buyers. These government grants for first-time home buyers provide money to the buyer to use as a down payment on a home. In order to be eligible, income restrictions may need to be met by the purchaser, in addition to qualifications based on previous home ownership. Being a first-time home buyer can sometimes mean that a minimum of three years has passed since a person has bought a home.
Down payment assistance may not cover 100% of money needed to buy a home. In some cases, the buyer will need to put 1% of the purchase price down in addition to the monies provided as part of government grants for first-time home buyers. If the home is sold within the first five years of ownership, these grants may have to be repaid.
Closing cost assistance is another form of government grant. Typically, the same requirements and qualifications need to be followed to gain approval for closing cost funding or reimbursement. While there are no federal programs covering closing costs in the United States, local and state government programs may allot money to support closing cost payment on an individual basis.
With both down payment assistance and closing cost support, a United States home buyer will still need to qualify for a government-based mortgage loan. These loans are backed by the government-insured mortgage program. This usually offers fixed, lower-than-average mortgage interest rates to those who meet all eligibility requirements. The lower rate is offered by a lending company because the government backs the loan, in case the buyer cannot continue making payments or experiences a temporary reduction in income.
In 2009, United States government officials passed the Worker Homeownership and Business Act. Under it, a tax credit of up to $8,000 US Dollars (USD) is available for qualifying first-time home buyers. The exact amount of credit is based on the purchase price of the home.
Government grants for first-time home buyers in countries outside the United States may also exist. Local housing authorities often have guidelines and requirements available for home buyers looking for this type of public assistance. People interested in such help should inquire with local housing or public service agencies for more information about what is available to them.