This is the eleventh in a series of videos and articles inspired by Mars Bank’s First Time Homebuyer live events. Sign up today for our free online first time homebuyer seminar.
There are a variety of sources for grants for first time homebuyers. Typically, these funds are available through housing or development organizations. Funds vary from state to state and county to county. Grant funds are awarded towards down payment and closing costs. Grant funds do not have to be repaid, however, there are stipulations for eligibility and repayment.
One of the stipulations is household income. Household income takes into consideration income of everyone who will be living in the property, regardless if they are a signatory on the mortgage or not.
For example, an individual is planning to buy a house in their name on the deed and mortgage. However, they have an elderly parent who will be living with them. For grant purposes only, the income of the parent will be considered. This includes pension and Social Security. The same holds true if the grant applicant has small children. The grant will take into consideration any child support or supplemental income that the children earn, including a part-time job.
Most grants do not require homebuyers to repay. However, homeowners are typically required to live in the home for five years. If the grant recipient sells the property before the five years ends, there is a sliding scale for repayment. In year one it would be a higher percentage, year two would be less, and so on until year five.
All grant programs require credit counseling – either live or online. Credit counseling covers topics such as monthly payments, the importance of staying current with payments, credit, and budgeting. The budgeting details what expenses to expect when buying a home.
Grant funds are made available each year. However, it is important to note that grants are on a first-come-first-serve basis. Plan ahead and work with a lender to apply for a grant.
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