Down Payment Grants for Homes
When planning to buy a property you will probably be stunned into disbelief at the colossal amount of money needed to do so. The idea of buying property and becoming a homeowner can be very exciting, but it is advisable to take a practical look at what's in store for you. How would it feel to have some extra money to put toward the down payment of a home? Not another loan, but money that you do not have to pay back in the form of a grant.
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Determine Your Need
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All kinds of costs are related to the purchase, including property evaluation cost, mortgage processing fees, down payment fee, lawyer fees. Even if you plan to take out a mortgage, the initial amount you have to cough up can be way beyond your budget.
First you will need to assess the value of the property you plan to buy and get a realistic figure, and then you calculate the down payment amount on it. Now it is time to apply for the down payment grant. There are many sources through which you can apply and we will talk about some of them in this article. The biggest advantage of down payment grants is that the money does not need to be paid back.
Local And State Grant Eligibility
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Local and state governments provide down payment grants to home buyers and the best way to find out whether you qualify is to go online and research the agencies that actually hand out these grants. You can then approach your local government office and inquire about the application process that needs to be completed. You need to be an American citizen and 18 years and older to qualify for the down payment grant, and there will be other qualification criteria you will need to comply with to avail the grant.
The easiest grants to qualify for are charitable grants. The amount grants can vary in size but are usually available up to 3 percent of the purchase price of the home--up to $22,500 being the limit and usually apply when an FHA loan is in place.
Other forms of down payment grants are available but have tighter guidelines for eligibility. Buyers may be required to attend and complete home ownership counseling course and also come up with at least 1 percent of their own funds for the loan down payment.
Other types of down payment grants have income limits, target ZIP codes for specific eligibility in redevelopment areas.
A common type of grant is called a "Forgivable Loan." This type of grant requires buyers to live solely in purchased home for a certain time period so that they do not have to repay the loan. Time period can be anywhere from five to 10 years depending on the area. If the buyer moves before that time frame is over, the loan must be paid back--at least a portion of it.
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Other Types Of Grants
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Apart from the government institutions, several nonprofit organizations provide down payment grants with the stipulation that funds need only be paid back if there is a surplus left over after down payment and closing costs are paid off, or if the intended purchase does not go through. Many of these organizations base their approval on your qualification for an FHA loan; once you get pre-qualification approval you can contact the loan officer, who will apply for the nonprofit down payment grant on your behalf.
Applying for Grant
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Applying for a downpayment grant has no drawbacks--you apply and you get it or you don't. There are no credit worthiness checks and you will not be required to provide collateral because it is not a loan and you don't have to pay the money back. Downpayment grants for homes are not impacted in any way by the size of your paycheck, the size of the property or how much credit card debt you carry.
Grant Payment
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The grant payment is made via check to you or to your bank directly. Based on the terms of the grant you may be allowed to use the remaining funds for expenses related to the purchase of the property.
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