Grants for 1st Time Home Buyers
A first-time home buyer is defined by the Department of Housing and Urban Development as someone who has not held ownership interest in a property for the past three years. First-time home buyers have a lot of grant resources available to them through government sources that can assist with moving expenses such as down payments and closing costs. Prior to going home shopping as a first-time home buyer, knowing the resources that are available can save you thousands of dollars.
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Types
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The types of government grants for private first-time home buyers are not as extensive in amounts or availability as what is open for builders and land developers. However, there are at least two or three resources available to first-time home buyers as grants that do not have to be paid back when purchasing a residential property. These come in the forms of programs like Nehemiah, NACA, and the first-time home buyer tax credit.
Nehemiah
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The Nehemiah program is a program funded by private builders and residential developers. The buyers using this program must qualify under their family income guidelines and not have any defaulted student loans or back child-support payments due. Using this program, a qualified home buyer is gifted up to three percent of the sales price of the property to use as a down payment. Closing costs for first-time home buyers can be gifted by either a family member or the seller directly.
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NACA
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NACA stands for Neighborhood Assistance Corporation of America. The NACA program helps first-time home buyers by providing grant money for down payments, closing costs and title policy fees. In exchange, recipients of the funds must provide evidence of solid creditworthiness and attend home buyer classes for several months. The NACA program aims to educate home buyers and help them understand the process in detail to increase the likelihood that they will keep their property and not lose it to foreclosure due to predatory lending practices that have occurred in the past.
Tax Credit
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The first-time home buyer tax credit is available to first-time home buyers who purchase and close on a home prior to Nov. 30, 2009. This tax credit can be provided up front to use as assistance for either the down payment or closing costs under a bridge loan. A bridge loan is one that allows home buyers the opportunity to have the credit provided to them from the lender granting the mortgage, with the understanding that they will pay it back in full upon receipt after closing on the new home. Should the home buyer not pay it back, it would become a second mortgage lien on the property.
Considerations
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Although a government grant in many cases is looked upon as completely free money that never has to be paid back, they do come with certain stipulations. For example, the first-time home buyer tax credit stipulates that a home buyer must live in the property for three years. If they sell or lose the property due to default prior to that, they will be required to pay back the tax credit. The same is true for many other grant programs if the home is sold or lost to foreclosure prior to the forgiveness of the grant, which can be anywhere from five to 15 years.
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