The goal of homeownership typifies the American dream. But if you’re a hopeful homeowner with the financial challenge of a down payment and closing costs standing between you and a new mortgage, you may qualify for a new homeowner grant. Although some grants are exclusively tailored for first-time homeowners, other grants are available to new homeowners as well as repeat homebuyers. So if you do a little research, you may be able to move into your dream home with a little assistance from a grant.
New Homeowner Grants
U.S. News & World Report notes that more than 60 percent of down payment assistance programs, which include grants, are tailored for first-time homebuyers. By merit of its name, a “grant” does not have to be repaid, which puts the icing on the cake of mortgage assistance. Grants typically take the form of down payment aid, but they may also include funds to cover closing costs.
New homeowner grants are available through federal programs, such as the National Homebuyers Fund®, as well as state programs. And some grant programs are specifically geared for certain groups, such as the Dream Makers Military Heroes Fund for certain military members.
National Homebuyers Fund
The National Homebuyers Fund® was established in 2002 as a nonprofit corporation with the goal of stimulating and expanding homeownership opportunities nationwide, according to the official NHF website. As of July 2019, NHF has given more than $336 million to help nearly 40,000 households with their home purchases.
The NHF helps by meeting some of the financial obstacles that trip up homebuyers, namely the down payment and closing costs, by gifting up to 5 percent of the mortgage loan amount in the form of a grant or by offering a zero percent interest second mortgage, which the NHF forgives after three years.
Borrowers do not have to be first-time homebuyers to qualify for this aid, although this grant helps many new homeowners qualify for their first home. NHF assistance is available in all 50 states. Visit NHFLoan.org to learn more about the available financial assistance programs it offers.
Dream Makers Military Heroes Fund
The Pentagon Federal Credit Union Foundation offers down payment and closing cost assistance for military members under its Dream Makers Military Heroes Fund. Both the mortgage applicant and the mortgage itself must meet PenFed’s eligibility requirements. Qualifying applicants who contribute at least $500 to their down payment and closing costs receive a "2-to-1 match" of their contribution, up to a maximum grant of $5,000.
Eligible applicants include active duty military members, reservists, National Guard members and veterans. Applicants must also be first-time homebuyers, unless the applicant has lost a home to disaster or divorce, or buyers who have not owned a home in the previous three years.
All types of mortgages from any lender are allowed under the Dream Makers program, but all loans must be fixed-rate 30-year mortgages.
Homeowner Programs by State
In addition to the federal and government grants that are available to assist homebuyers, new homeowners can also find grants through statewide programs. Programs at the state level vary widely in eligibility requirements as well as the amount and type of grants they offer.
HSH has a list of the grants offered by each state, which include those that are available to first-time homebuyers as well as repeat buyers. Visit the HSH.com homebuyer programs by state webpage and select your state from the
Victoria Lee Blackstone was formerly with Freddie Mac’s mortgage acquisition department, where she funded multi-million-dollar loan pools for primary lending institutions, worked on a mortgage fraud task force and wrote the convertible ARM section of the company’s policies and procedures manual. Currently, Blackstone is a professional writer with expertise in the fields of mortgage, finance, budgeting and tax. She is the author of more than 2,000 published works for newspapers, magazines, online publications and individual clients.