There are lots of come-ons for "free money for first time homeowners." But unlike a lot of other "free money" nonsense, it's true. If you are a first-time homeowner (and that's defined as someone who has not owned their primary residence in the last 3 years), there are some great deals for you. That's right--even if you owned a house 10 years ago, but got divorced, ended up a renter, and have been renting ever since, you fit the government's definition of a first time owner. There's a couple types of help for you, from a variety of sources.
For one thing, many state and local housing agencies offer mortgages at reduced rates for first-time buyers. They may also offer downpayment assistance in the form of a grant, or, more commonly, a second mortgage which may be zero percent, and forgiven over a shorter period. As an example, the downpayment may be up to 3% of the price of the house. It could be given to you in the form of a second mortgage, which will be forgiven over a period of seven years. If you sell the house before then, you may have to repay part of that loan, but if you don't, it can be forgiven. Conditions of mortgages and types of aid differ from state to state. There are restrictions on income and home prices that apply. More generous income and price limits may be in effect for homes in "target areas," economically poor and depressed places where the government wants to encourage people to buy homes.
To find your state agency, go to the website of the National Council of State Housing Agencies and search for your state's housing agency and its website. Another possibility is the housing or neighborhoods department in your own city, which you should be able to find in the blue government pages of the phone book. Community action agencies (CAAs), nonprofit groups created to help the poor in their particular area, may offer programs for first time homebuyers, too, and a check of the Community Action Partnership website can help you find one in your area. Community development corporations (nonprofits that are trying to improve a particular area, county or neighborhood) often have programs, too. Use the National Congress for Community Development's website to find the state organization. They can advise you of CDCs in your area. So can your local housing department.
Look at all your options--state and local. Be sure to inquire about whether the programs are accepting applications right now--programs can only exist as long as there are funds. See what is the best bargain in the area that you want to buy. For instance, state programs are good for the whole state, but a local community agency may have boundaries for where a home may be purchased to qualify for their program.
Often, besides income limits, a program may require you to have financial counseling. Welcome it! Any agency wants to see that the program is successful for you and your new neighborhood, and they want to prepare you for the leap into home ownership.
For one thing, many state and local housing agencies offer mortgages at reduced rates for first-time buyers. They may also offer downpayment assistance in the form of a grant, or, more commonly, a second mortgage which may be zero percent, and forgiven over a shorter period. As an example, the downpayment may be up to 3% of the price of the house. It could be given to you in the form of a second mortgage, which will be forgiven over a period of seven years. If you sell the house before then, you may have to repay part of that loan, but if you don't, it can be forgiven. Conditions of mortgages and types of aid differ from state to state. There are restrictions on income and home prices that apply. More generous income and price limits may be in effect for homes in "target areas," economically poor and depressed places where the government wants to encourage people to buy homes.
To find your state agency, go to the website of the National Council of State Housing Agencies and search for your state's housing agency and its website. Another possibility is the housing or neighborhoods department in your own city, which you should be able to find in the blue government pages of the phone book. Community action agencies (CAAs), nonprofit groups created to help the poor in their particular area, may offer programs for first time homebuyers, too, and a check of the Community Action Partnership website can help you find one in your area. Community development corporations (nonprofits that are trying to improve a particular area, county or neighborhood) often have programs, too. Use the National Congress for Community Development's website to find the state organization. They can advise you of CDCs in your area. So can your local housing department.
Look at all your options--state and local. Be sure to inquire about whether the programs are accepting applications right now--programs can only exist as long as there are funds. See what is the best bargain in the area that you want to buy. For instance, state programs are good for the whole state, but a local community agency may have boundaries for where a home may be purchased to qualify for their program.
Often, besides income limits, a program may require you to have financial counseling. Welcome it! Any agency wants to see that the program is successful for you and your new neighborhood, and they want to prepare you for the leap into home ownership.
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