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Understanding the grants for first time home buyers

For those planning to buy a house but struggling with the obstacle of a down payment, especially those from either a middle-income or low-income household, can look into the option of securing a first-time homeowner grant. Saving money when you have a regular list of things to pay for including rent, utilities, grocery, car ownership, etc., can be highly improbable. Under these circumstances, the only economically feasible option would be to get a homeowner grant and buy a house without a down-payment.

What are first-time homeowner grants?
These grants take care of the down payment requirement by working in combination with low-down-payment mortgages, through which an aspiring homeowner can buy a house without an actual down-payment as well as take care of the first mortgage payment.

In general, a down payment of about 3.5% of the total cost of a home has to be prepaid in an FHA mortgage. In some cases of mortgage grants, a 3% down-payment may be allowed. However, first-time homeowner grants remove this down payment option.

These grants are mostly available only for first-time homebuyers, and only for those homes that will be owner-occupied upon purchase. However, there are certain lending institutions that define this criterion as an individual who has not owned any form of a home in the past three years. There is also the restriction that these grants would be unavailable for those looking for an investment property or looking to buy a second home.

Facts about grants for first-time homeowners

These grant amounts are capped at a certain limit.
The first-time homeowner grants are only available to individuals whose income is below a certain median. This median is determined based on the geographic-income profile of the place of residence.
There are lenders in the market who allow for a certain percentage beyond the income median but may have their own set of other criteria to be adhered to for getting the grant.
One criterion to get the grant would be to attend a prescribed homebuyer course, either through a contact class or an online program.

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