Struggling To Buy A Home? Find Out If You Qualify For One Of These 12 Homeownership Programs

Key Takeaways

  • Did you know that there are numerous homeownership programs and grants available?
  • Many programs are geared toward first-time homebuyers, as well as low- to middle-income families, who struggle to buy a home.
  • With the help of these programs, homeownership is a possibility––even for those with less-than-perfect credit or those without much money for a down payment.

If you are one of many Americans struggling to save up for a house, there are numerous homeownership programs that may be able to assist you. Perhaps you’ve put off buying a home because you haven’t been able to save up for a down payment, or because you don’t have a great credit score. However, achieving the dream of homeownership might be much closer than you think, if you know where to look. If you have been looking for homeownership assistance programs that will help you afford a house and provide big cost savings, you’ve come to the right place.

Do You Qualify For These 12 Incredible Homeownership Programs & Grants?

Both public and private entities are offering home buying programs and grants in a concerted effort to encourage homeownership in the U.S. These programs mostly target first-time homebuyers, as well as low to moderate-income households. There are 12 different homeownership assistance programs to choose from; some are sponsored by federal agencies, while others are offered by non-profit and private entities. Each section below provides an overview of a program or grant, along with a breakdown of who the program is meant to help and its eligibility requirements. If you’d like more information, visit the official website provided for each respective program.

Investment properties are not eligible for most homeownership programs, which are primarily intended for owner-occupants. For those interested in investment properties, visit this resource on how to invest in real estate with little to no money of your own.

  • FHA Loan
  • FHA 203(k) Loan
  • VA Loan
  • USDA Loan
  • Good Neighbor Next Door HUD Loan
  • Native American Direct Loan
  • Energy Efficient Mortgage
  • Local Homeowner Assistance Programs
  • National Homebuyers Fund
  • First Home Club
  • HomePath Ready Buyer
  • Dollar Homes

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Home ownership programs

FHA Loan

The FHA loan is a go-to program for many Americans, especially first-time homebuyers. The Federal Housing Administration (FHA) offers insurance to mortgage lenders, so that they are not exposed to loss in the case of borrower default. This protection allows lenders to lower their eligibility requirements and extend mortgages to a larger pool of applicants. All FHA borrowers are required to pay mortgage insurance.

  • A Good Fit For: Any homebuyer who would benefit from a lower down payment and credit score requirements. The loan also allows for the down payment to come in the form of a gift, making it possible for first-time homebuyers to make their purchase with little to no money up front.

  • Who’s Eligible: Buyers with steady income can put down as low as 3.5 percent if they have a credit score of 580 or above. The down payment requirement increases to 10 percent for those with credit scores between 500 to 579.

FHA 203(k) Loan

The FHA 203(k) rehabilitation loan can be a great solution for buyers who want to purchase a fixer-upper home. Factoring in the property’s after-repair value, the loan bundles the costs of purchasing and renovating the property. Borrowers requiring extensive renovations above $35,000 are required to hire an approved consultant, who will also serve as the contractor and project manager. Find out more about whether or not a FHA 203(k) loan is right for you.

  • A Good Fit For: Homebuyers who feel that they can take on a fixer-upper and want to gain instant equity. Buyers can find cheaper homes that need rehabilitation, and use part of the loan to fund repairs and renovations. FHA 203(k) rehabilitation loans are also great for buyers who want to customize a home to their personal tastes and preferences.

  • Who’s Eligible: Applicants must have a credit score of at least 640 and make a down payment of at least 3.5 percent of the purchase price. The property in question must require a minimum of $5,000 in rehabilitation costs.

VA Loan

Veterans and active service members of the military are eligible to obtain mortgage assistance from the U.S. Department of Veterans Affairs (VA). The VA loan does not require a down payment or private mortgage insurance, and offers competitive mortgage rates. The agency also sponsors grants for veterans who need to adapt homes for service-related disabilities.

  • A Good Fit For: Members of the military network who would like to purchase a home, or adapt a home so that it is accessible for a service-related disability.

  • Who’s Eligible: Any verifiable member of the military, including active service members, veterans and spouses. There are no down payment or credit score requirements, making homeownership very attainable for those who are eligible.

USDA Loan

Designed to promote economic development, the U.S. Department of Agriculture (USDA) mortgage program assists low- to moderate-income households with the purchase of homes in rural areas. The loan can also be used to repair and renovate a property, make a property more energy efficient, or even install essential household appliances.

  • A Good Fit For: Homebuyers living in or wanting to relocate to a rural area.

  • Who’s Eligible: The loan encourages a score of 640 or above. Anyone with a score below 640 can apply, but are required to supply additional financial documentation. Applicants must also meet income limitations based on their household size and property location. Visit the USDA Loan website to determine your eligibility.

Good Neighbor Next Door HUD Loan

Public service workers who qualify for the Good Neighbor Next Door program have the opportunity to purchase homes at half the list price. The Department of Housing and Urban Development (HUD) implemented this program as a way to revitalize areas and make communities safer, as well as to promote homeownership. Eligible properties are sold exclusively through the Good Neighbor Next Door sales program.

  • A Good Fit For: Public service workers who would benefit from receiving significant financial assistance when buying their first home.

  • Who’s Eligible: Law enforcement officers, pre-kindergarten through 12th grade teachers, firefighters and emergency medical technicians (EMTs). Homebuyers must commit to living in the property for at least 36 months as their sole residence.

Native American Direct Loan

Starting in 1992, the Native American Direct Loan (NADL) program has made home loans available to Native American veterans who want to buy property on federal trust lands. The U.S. Department of Veterans Affairs serves as the lender, and borrowers enjoy not having to make a down payment or pay private mortgage insurance.

  • A Good Fit For: Eligible Native American veterans who would like to buy property on a federal trust land.

  • Who’s Eligible: Native American Veterans and their spouses, as well as non-Native Veterans who are married to a Native non-Veteran. The tribal organization to which they belong must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs. Applicants must also apply for a Certificate of Eligibility.

Energy Efficient Mortgage

Insured through both the FHA and VA, the Energy Efficient Mortgage (EEM) is a loan program that incentivizes homebuyers to purchase energy-efficient homes, or buy homes that they will make energy efficient through improvements. The EEM is added on to an existing mortgage, and does not affect the down payment amount or require a new appraisal. Existing homeowners can also apply for the EEM benefit in order to save on energy costs and increase the resale of their properties.

  • A Good Fit For: Homebuyers and homeowners who would like to save on energy costs, and potentially increase the resale value of their properties by making them energy efficient.

  • Who’s Eligible: Can be applied to most home mortgages. Applicants are required to obtain a home energy assessment, which will determine the loan amount.

Local Homeowner Assistance Programs

Homebuyers can also look to their city or state governments for assistance with homeownership. These programs are typically designed for first-time and low to moderate-income buyers, and offer competitive mortgage programs, down payment and closing cost assistance, as well as home buying education. Check your local or state housing authority to find out what types of programs are available, and the eligibility requirements for each.

  • A Good Fit For: Low- to moderate-income households, including first-time homebuyers who would benefit from affordable housing options.

  • Who’s Eligible: Eligibility requirements vary by program type, but typically have income and purchase price limitations that are based on local medians. In addition, applicants must be residents of the city and state sponsoring the program.

National Homebuyers Fund

The National Homebuyers Fund is a non-profit organization that offers financial assistance programs for homeowners and homebuyers. Perhaps their most prominent is their down payment assistance grant, which can provide up to five percent of the mortgage loan. The organization also manages down payment assistance, mortgage credit certificate (MCC) and energy efficiency programs for California residents, in partnership with the Golden State Finance Authority.

  • A Good Fit For: Any homebuyer who would benefit from the NHF down payment assistance program. Particularly great for California residents who can take advantage of programs sponsored by the Golden State Finance Authority.

  • Who’s Eligible: Income and credit score requirements are generally flexible, but vary by program type.

First Home Club

Sponsored by the Federal Home Loan Bank of New York, the First Home Club is designed to assist first-time homebuyers with low-to-moderate incomes. The program will match funds saved in a dedicated savings account $4 to $1, and up to $7,500.

  • A Good Fit For: First-time homebuyers who are committed to purchasing property in New York, New Jersey, Puerto Rico or the U.S. Virgin Islands.

  • Who’s Eligible: First-time homebuyers with an adjusted household income of 80 percent or less of the area median income. Qualifying property types include newly manufactured homes, multifamily properties that have up to four units, condominiums and cooperatives.

HomePath Ready Buyer

The HomePath Ready Buyer program is administered by Fannie Mae, a government-sponsored entity that offers mortgage options that benefit low- to moderate-income households. The program targets first-time homebuyers, who are required to complete an online educational course. Upon completing the course, buyers are eligible to receive three percent toward closing costs when purchasing a foreclosure home owned by Fannie Mae. Buyers can also make a down payment that is as low as three percent.

  • A Good Fit For: First-time homebuyers who are interested in purchasing a real-estate owned (REO) property, and who would benefit from a low down payment requirement, plus closing cost assistance.

  • Who’s Eligible: Low- to moderate-income households who have not purchased home before, or within the past three years, and who have completed the HomePath Ready Buyer education program.

Dollar Homes

If anything could be dubbed the eBay of homes for sale, then the HUD’s Dollar Home portal would be it. When a homeowner defaults on a mortgage that was insured by the FHA, it is foreclosed upon and repossessed by the federal government. These homes are then re-sold to the public and nonprofit entities at affordable prices, along with low down payment requirements and allowances that can be used to pay for closing costs or repairs. Interested buyers can bid on properties through the HUD Home Store, although bids must be submitted by their licensed broker or agent. If you are interested in purchasing a dollar home as an investment property, be sure to visit this HUD Homes 101 resource for investors.

  • A Good Fit For: Buyers who are willing to take on a foreclosure property containing up to four units that are sold “as is.” They should also want to live in the property as their primary residence for a minimum of two years.

  • Who’s Eligible: Owner-occupants who have an approved loan or who can offer cash. For example, buyers can obtain an FHA-insured loan with a minimum credit score of 580 and a 3.5 percent down payment.

Summary

You may have noticed that most of these programs offer low down payment requirements. It is important to note, however, that down payments under 20 percent of the home value will typically result in mortgage insurance fees. If you prefer to put down a large down payment to avoid these fees, here is a resource on how to save for a house.

These homeownership programs offer solutions to many Americans who would otherwise be unable to attain their dream of homeownership. Not taking advantage of these types of programs due to a lack of awareness is equivalent to leaving money on the table. Explore your options and find out if you might qualify for homeownership much sooner than you had imagined.

Will any of these homeownership programs help you achieve your dream of buying a home? Feel free to discuss in the comments below:

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