It’s a tough time to be a first-time home buyer. With persistently high home prices across the country, limited affordable inventory, and historically high interest rates, getting your foot in the door of your own home can be challenging.

Fortunately, recognizing the difficulties that many people face in buying a house, cities and local non-profits, the federal government, and many states now offer first-time home buyer grants to make it easier for working families to afford their first home.

Unlike loans, these grants are one-time payments designed to help you afford your property and do not need to be repaid.

In this blog, we’ll take a look at who qualifies for these grants and how you can go about applying for one. We’ll also explore some of the programs that might be available in your state, and explain exactly how loans differ from grants. Read on to learn more!

Table of Contents

• How to Get a First-Time Home Buyer Grant

• Finding Local Programs

• Step-by-Step Guide to Getting a Home Buyer Grant

• First-Time Home Buyer Grants by State

• What’s the Difference Between a Grant and a Loan?

• Listerhill: Your Community Housing Partner

How to Get a First-Time Home Buyer Grant

Let’s break down who qualifies for a first-time home buyer grant, what gets taken into consideration when applying, and where to find programs in your local community.

How to Qualify for a First-Time Home Buyer Grant

To qualify for first-time home buyer benefits, you must meet the following criteria:

• You must be a first-time home buyer: The definition of being a first-time home buyer is broad and generally includes anyone who has not owned a home or lived in a home owned by a spouse or domestic partner in the last three years.

• Income limits: Grants are meant to help those with low incomes afford housing and typically have strict limits on how much you or your household can earn relative to local median incomes.

• Property requirements: The home you are buying must be a primary residence and usually needs to be located in specific areas where affordable housing is needed or local authorities are looking to redevelop neighborhoods.

Additional criteria also apply. Some programs are for active military personnel, veterans, first responders, teachers, or public services workers. Others focus on the needs of seniors, disabled people, or members of historically disadvantaged minorities.

Many people worry that a low credit score will prevent them from accessing grants. It’s true that many programs do look at credit scores and have minimum credit scores required. However, because the aim is to help people get into homes, credit requirements are usually more lenient than those applied in commercial lending.

Finding Local Programs

How can you find out about programs that operate in your local community or state? Start with the following resources:

• The U.S. Department of Housing and Urban Development (HUD) offers a Homeownership Assistance Search Tool to help you find local programs. Simply select your location and you’ll find information tailored to homebuyers in your area.

• Ask your local real estate agent or your local housing authority office. Sometimes, they are aware of more specialized programs that meet your needs.

• Mortgage loan officers at local lenders are familiar with programs in the states where they work. At Listerhill Credit Union, our local mortgage loan officers have experience with the home-buying process in our communities.

The Veterans Administration also offers home buyer grants to certain categories of disabled veterans.

Types of Grants

Direct assistance for home buyers usually takes one of two forms.

• Grants: This is a lump sum paid out to help cover a down payment or closing costs that do not need to be repaid. It usually requires that you live in the home for a stipulated period, and maintain the property to a particular standard.

• Forgivable Loans: This is a loan or deferred second mortgage that is granted to enable you to purchase a property. The loan or mortgage is forgiven if you stay in the property for a set period. Penalties apply if you sell or refinance before the end of the period.

Step-by-Step Guide to Getting a Home Buyer Grant

Ready to get going on your own first-time home buyer grant hunt? Here are the steps you should take:

1. Get Prepped

Take the time to gather the financial documents you’ll need to apply for your grant, as well as loans to cover the remainder of the cost of your home. You’ll need:

• Your credit history, including recent credit reports

• Proof of income and information about your employment

• Information about any other debts or liabilities, and your normal household costs

• Information about the number of people who will be living with you

You’ll also need to have an idea about where you want to purchase a home, at least in terms of the neighborhood if you do not already have a specific property picked out.

2. Do Your Research

Now it’s time to find out about grants for which you might be eligible. The more research you do and the more people you talk to, the better your chance of finding a grant that works for you.

• Start with HUD’s Homeownership Assistance Search Tool to find local programs

• Talk to experienced realtors and local housing authority offices

• Contact the mortgage loan officer at your local credit union for state and neighborhood-specific information

3. Submit Applications

Now complete applications with the required information for the grants you have identified. Use the documents you had previously gathered. Be sure you meet the prerequisites of each program you choose to apply.

4. Follow Up

Keep track of the application deadlines for each grant you apply to and follow up as needed.

First-Time Home Buyer Grants by State

Let’s take a look at some of the grant or forgivable loan programs that are available in Listerhill’s service area.

First-Time Home Buyer Grants: Alabama

• Alabama Housing Finance Authority’s Affordable Income Subsidy Grant

• City of Mobile’s First-Time Home Buyers’ Program

• City of Huntsville’s Down Payment Assistance Program

First-Time Home Buyer Grants: Georgia

• Fulton County Homeownership Program (HOP)

• Gwinnett County Homestretch Down Payment Assistance Program

• Atlanta Housing Homeownership Program

• City of Savannah DreamMaker Home Purchase Assistance

First-Time Home Buyer Grants: Mississippi

• Mississippi Home Corporation grants

• Local homeownership voucher programs

First-Time Home Buyer Grants: Florida

• FL PLUS Programs (HFA Preferred and HFA Advantage PLUS)

• Hometown Heroes Program

Tennessee First-Time Home Buyer Grant

• City of Clarksville Homebuyer Assistance Program

• City of Chattanooga Neighborhood Enterprise (CNE) Homebuyer Assistance Program

• Memphis Down Payment Assistance Program

• Knoxville Community Development Corporation (KCDC) Homeownership Program

What’s the Difference Between a Grant and a Loan?

Not sure about the difference between a first-time home buyer grant and a first-time home buyer loan? Simply put, grants are one-time payments that don’t need to be repaid, but loans are borrowed money that does need to be repaid in regular payments over time.

Things can get complicated when it comes to housing assistance. Very often, local authorities or non-profits will lend money as a deferred loan, often at 0%. This is essentially free money until the deferred loan comes due.

However, in many cases, these loans are forgiven if you stay in the house for a set time. Provided you are prepared to stick around, a 0% deferred loan works pretty much the same way as a grant does.

Listerhill: Your Community Housing Partner

With deep community roots and a thorough knowledge of the local housing market, mortgage officers at your local credit union are a great source of information about housing in your area.

Credit unions are different than many commercial banks because they are more locally-focused and owned entirely by their members. That means when you join one, you’re treated as a co-owner, not just a customer. That means more personal service, and home-buying products tailored to your financial needs and goals.

And, because credit unions are community-owned not-for-profits, you’ll see lower fees and fewer charges with profits rolled back into keeping mortgage rates lower than those at the big banks.

Listerhill Credit Union is no different. We’ve been helping our members get access to affordable housing for their families for decades. We understand how housing works in our communities and we are ready to help.

Come on in or give one of our knowledgeable home loan officers a call. We’ll take the time to understand your home ownership dreams and recommend products and services that can open doors for you and your family.

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