Must-Know Programs Essential for First-Time Home Buyers

This blog post is all about programs for first-time home buyers.

Are you ready to become a homeowner? Congratulations! It's an exciting time, but it can also be overwhelming. The costs for closing and the down payment can take a big chunk of your savings. Many first-time home buyers use all their savings for these costs. Keep in mind that owning a home also means planning for upgrades and fixtures. Some grants and programs can help you become a homeowner and protect your savings.

Grants can assist with down payments and closing costs when purchasing a home, yet many first-time homebuyers still need to be aware of these available programs.

As a first-time home buyer, you may need help knowing where to start or what programs can help you. Don't worry; we've got you covered! This blog post will discuss some programs specifically designed for first-time home buyers. These programs can simplify the process and make it more affordable for you as an aspiring homeowner.

Who qualifies as a first-time home buyer? What is the definition of a first-time home buyer?

When you hear the term "first-time home buyer," you might assume it means anyone buying a home for the first time. However, that's not technically true. According to the U.S. Department of Housing and Urban Development, a first-time home buyer has not been a principal residence owner during the previous three years (ending on the date when the property was purchased).

The scenarios of "first-time homebuyers" are as follows:

• A person who owned a home with their former partner or spouse while being married and is now a single parent;
• A homeowner who only owned a home with their spouse and is now displaced;
• Someone who has been the owner of a property that did not comply with local/state/model building codes;
• An individual who owned a principal residence that is not permanently fixed to a foundation

If you meet the criteria described above, the information in this post will help you achieve your dream of home ownership.

State-run programs.

Almost every state has downpayment assistance programs. These programs may include down payment assistance, closing cost assistance, or grants for renovations. However, requirements and eligibility vary by state, so please check with your local government for more information.

There are two types of programs:

-Grants and forgivable loans(that don't have to be repaid if you stay in the home long-term)

-Repayable loans with meager interest rates can save you thousands of dollars over the years. It would be best if you thought of these programs as second mortgages.

To qualify for these state-run programs, typically, you must:

-Be a first-time home buyer

-Have an income below a specific threshold

-Agree to live in the purchased property for at least a certain number of years

-State-run programs can be your gateway to owning a home, especially if you cannot afford a down payment and closing costs.

For example, The Division of Housing and Community Development (DHCD) supports the City of Philadelphia's Philly First Home program. The program offers a home buyer assistance grant of up to $10,000 (or 6% of the purchase price, whichever is less) to help first-time home buyers.

In general, first-time home buyers may be eligible to receive 3-5% of the loan amount as assistance towards their down payment. This assistance is provided as a grant, which does not have to be repaid, making it particularly beneficial for those on a strict budget.

In addition to state-run programs, many cities and counties offer down payment assistance programs. These may include grants, no-interest loans, or low-interest loans to help cover down payment or closing costs. Such programs are often tailored specifically for residents and may have additional requirements, such as purchasing a home in a designated area or being employed within the city or county.

To find out what programs are available near you, check with your city or county government office or search online using keywords such as "down payment assistance programs" and your location.

In summary, first-time home buyers have several options for finding financial assistance for their down payment. With resources like NCSHA and local government programs, owning a home may be more achievable than one might think. It's always worth exploring all available options and speaking with a trusted lender or housing counselor who can guide you in choosing the program that best fits your situation. Don't let a down payment stand in the way of your dream home; explore these programs and see how they can help you become a homeowner.

National homebuyers fund

Program designed to assist low and moderate-income buyers. It comprises a 3% grant for closing costs or down payment assistance. Learn more at https://www.nhfloan.org/about.html

National Council of State Housing Agencies (NCSHA). This organization is an excellent resource for finding state-specific homebuyer programs. They also offer helpful webinars and workshops that provide valuable information on homeownership.

Qualifications include:

• income limits based on area
• 640+ credit score
• DTI(debt to income) of 45% or lower
• Use an NHF recognized lender

Grants from lenders

Several private-sector lenders offer first-time home buyer grants. To qualify for a grant, you will likely need to meet specific requirements, such as income limits and credit score minimums.

Some examples of lenders offering grants include:

• Navy Federal Credit Union Homebuyers Choice Loan - 0% downpayment
• Regions Affordable 100 - 0% downpayment
• Wells Fargo's NeighborhoodLIFT program - up to $15,000 for downpayment or closing costs 
• Bank of America's Down Payment Grant Program - up to 3% of the purchase price

Remember to inquire with your lender about available first-time home buyer programs; some lenders may even offer in-house programs to assist with down payment and closing costs.

It's important to note that these grants may have certain restrictions and eligibility requirements. Before making a decision, it's essential to do thorough research and compare options.

Chenoa Fund

Chenoa Fund is another first-time home buyer program that provides down payment assistance as a second mortgage. 

Here are the highlights of this program:

• This grant can cover up to 3.5% of the purchase price.
• It is a 3-year silent, forgivable loan, which means that if you live in the house for three or more years, the loan becomes forgivable.
• Repayment options are available if you sell the house before the 3-year mark. This applies whether you sell or refinance the home.

Qualifications include:

• Minimum credit score of 620
• Debt-to-income ratio 45% or lower
• Must complete a homeownership education course
• Use a Chenoa-approved lender

For more information, please visit the official  Chenoa fund website.

Good Neighbor Program

The Good Neighbor Next Door program is a HUD program created for law enforcement officers, teachers (pre-Kindergarten through 12th grade), firefighters, and emergency medical technicians.

What this program gives:

• 50% discount on the listed home price
• The ability to purchase a single-family home in "revitalization areas"
• Must reside in the property for three years as your sole residence

Revitalization Areas are regions designated by HUD, as authorized by Congress under the National Housing Act. These areas aim to foster revitalization by expanding homeownership opportunities within them.

The criteria for designating an area as a Revitalization Area relate to:

1. Household Income,
2. Homeownership Rate, and
3. FHA-insured mortgage foreclosure activity.

You can visit the Good Neighbor Next Door website to learn more about this program and check if you are eligible.

The major drawback:

• you must buy a HUD foreclosure to receive the discount( you can check HUD properties on this website)
• home must be in a "revitalization area"

For more information on this program and to see if you qualify, visit the HUD website.

QA 

What is a first-time homebuyer program?

A first-time homebuyer program is designed to help individuals who have never owned a home before or who have not owned a home in the past three years purchase their first home. These programs often offer financial assistance and educational resources to help individuals navigate buying a home.

Who can qualify for a first-time homebuyer program?

Eligibility requirements vary depending on the specific program. Still, first-time homebuyer programs are generally available to individuals who meet income and credit score criteria and plan to use the purchased property as their primary residence.

What types of assistance are offered by first-time homebuyer programs?

First-time homebuyer programs often offer financial assistance through down payment and closing cost grants or loans. Some programs also provide educational resources, such as homebuyer education courses, to help individuals better understand buying a home.

Are there any drawbacks to first-time homebuyer programs?

While first-time homebuyer programs can benefit those looking to purchase their first home, they may have specific limitations or restrictions. For example, some programs may require individuals to buy a HUD property to receive assistance, while others may only be available for properties in designated revitalization areas. It is essential to carefully review any program's eligibility requirements and terms before applying.

How can first-time homebuyer programs be beneficial?

First-time homebuyer programs can provide individuals with the financial assistance and educational resources they need to purchase their first home successfully. These programs can also help stimulate the housing market by providing more opportunities for individuals to become homeowners. Additionally, home ownership can have long-term financial benefits such as building equity and increasing net worth. Overall, first-time homebuyer programs can be a valuable resource for those looking to achieve the dream of homeownership.

This blog post is all about programs for first-time home buyers.

In conclusion

While purchasing a first home may seem daunting, first-time homebuyer programs are available to help make the process more manageable. These programs offer a range of benefits, from financial assistance to educational resources, and can ultimately help individuals achieve the milestone of homeownership. Researching and considering all options carefully when choosing a program is essential. However, home ownership can become a reality for first-time buyers with the proper support and resources. So don't be discouraged - explore your options and take advantage of these programs to make your dream of homeownership a reality! Remember, investing in a home provides shelter and long-term financial benefits for you and your family. Happy house hunting!

This blog post is for informational purposes only and should not be considered as financial advice!