8 First-Time Homebuyers Grants and Programs for 2022

Jul 27, 2022

Down Payment Grants! 

One of the major things that prevent people from getting started in real estate is the down payment. Either people think that in order to get started you need 20%-25% down (this translates to hundreds of thousands of dollars in some markets!), or people simply don't have enough discretionary income to save up for a down payment. Well the good news is I have a solution for both of these perceived problems. 

Firstly, you don't necessarily need 20%-25% down. While it helps lower your monthly payment, and may help you to avoid private mortgage insurance (PMI), you can actually purchase a property with less than 25% down. There are 3%, 5%, 10% and 0% down programs! 

First-Time Home Buyer Grants

Let's get into it! Here are a list of 8 grants and programs to help you buy real estate in 2022. 

1. NACA $0 down, $0 closing costs program

NACA stands for Neighborhood Assistance corporation of America. It is one of my favorite programs that I champion for people looking to get into real estate and homeownership. NACA is a non-profit organization that offers down payment and closing costs assistance. NACA has received billions of dollars in funding from big bank partners like Bank of America to provide the down payment and closing costs for millions of Americans. $0 down and $0 in closing costs! You can also use the NACA program to purchase 2-4 unit multifamily properties, which I love. Sound too good to be true? it isn't! There is fine print and there are some caveats, such as having to live in the property you purchase (they're not giving houses out to free to investors that don't plan on living there!!!), but if you'd like to learn more, I suggest you go to their website, www.naca.com and to register for their FREE workshop. 

2. State and Local Government Grants

Many people are not aware that both local and state governments have down payment assistant grants that allow you to purchase real estate with little to nothing down! Some people are aware of state and local government grants but they don't know how to find them. Then there are those who don't know that you can combine state and local grants with programs like the 3.5% down FHA program and end up putting down even LESS than 3.5%!!! But all these things are possible. To learn more about what state and local government grants are available or which ones you're eligible for, find your local city's government website and search for "housing grants" or "[insert your city] down payment / housing assistance." 

3. National Homebuyers Fund

The National Homebuyers Fund is a non-profit public-benefit corporation. It funds up to 5% off a homes purchase price for both first-time and repeat home buyers. You can't directly apply for the grant, but your lender can help you apply for it. This first-time homebuyers grant can be used with a conventional, VA, FHA or even a USD loan.

There are a few different types of down payment or housing assistance grants.  There are:

  • Grants that are completely free with no upper income limits.
  • Grants with minimum credit score requirements and upper income limits (but still free).
  • Interest free loans that are forgiven after the first 5 years. 
  • Grants for specific careers (firefighters, teachers, nurses etc). 

This grant falls into the category of an interest-free loan/grant that is forgiven 5 years after the purchase date. Call (916) 444-2615 to get a list of participating lenders.

4. The $25,000 Downpayment Toward Equity Program

This program is expected this year, in 2022. In 2021, Congress introduced a bill titled The Downpayment Toward Equity Act, a home buyer grant for first-generation home buyers with extra grant money available to renters with socially or economically disadvantaged backgrounds. 

The Downpayment Toward Equity Act gifts up to $25,000 so first-time homebuyers can buy their first home. The $25,000 can be used towards your down payment, your closing costs, or even towards lowering your interest rate by buying down points. 


What is a First-Time Home Buyer Program?

First-time home buyers programs are designed to help people who have never owned a home, or better yet, their own home. Non-profits, federal, state, and local governments, non-profit organizations and now even banks offer these first-time homebuyer programs to promote The American Dream  of Homeownership. You will likely see these programs in the form of down payment assistance, forgivable second-mortgages, closing costs assistance, or tax credits.

5. First-Time Home Buyer Tax Credit

Tax credits reductions in a person's tax bill, based on a specific behavior. In our case, it's based on buying your first home. 

An example of this happened in 2009 when President Barack Obama offered up to $8,000 in tax-credits for people buying their first property. It is almost like a rebate. 

Homeowners currently already get tax-bill reductions in the form of being able to deduct and write-off their mortgage interest payments. Congress is currently discussing a similar tax credit for home buyers. There is a proposed $15,000 tax credit for first-time home buyers, retroactive to December 31, 2020, that subtracts up to $15,000 in home buyer tax liability.

Check your eligibility for the program here.

6. Closing Cost Assistance Programs for Home Buyers

Closing cost assistance programs are home buyer stimulus plans that pay up to 100% of a buyer’s purchase closing costs, including title expenses, transfer taxes, and mortgage fees.

Typically, home buyers apply for closing cost assistance through their local housing agency, separate from their lender. You can look up your state’s housing agency on the National Council of State Housing Agencies website. The buyer and the home must meet the agency’s minimum quality standards.

Closing cost assistance programs target lower-income home buyers with at least average credit scores.

Bank of America also offers $7,500 towards closing costs for homebuyers. Check it out here.

7. Down Payment Assistance Mortgages

Down payment assistance mortgages are loans that replace a home buyer’s typical cash down payment with borrowed money at favorable terms.

Access to down payment money at below-market mortgage rates is one form of down payment assistance. Instead of making a down payment using cash from a bank account, home buyers borrow money from a bank at 0 percent or 1 percent with ten years to pay it back.

Deferred mortgages are another form of home buyer down payment assistance.

A deferred mortgage is a loan that requires no repayment while you still live in the house that you bought. You repay the deferred mortgage only when you sell your home or refinance it.

For example, let’s say you borrow $25,000 for a down payment using a deferred mortgage and choose to sell in five years because your home’s value doubled. After your closing, you pay the $25,000 back to the lender and keep the rest of the profit for yourself.

Typically, down payment assistance mortgages are available through local foundations and municipal governments only. They’re often limited to first-time buyers whose income falls below area averages and whose credit history shows a decent record of on-time payments. Here's a list of down payment assistance programs.

Bank of America also offers a $10,000 grant towards down payments for homebuyers. Check it out here.

8. Forgivable Mortgages

Forgivable mortgages are loans for down payments that lenders erase once a buyer meets certain time-based conditions.

As an example of how forgivable mortgages work, let’s say a first-time buyer uses a forgivable loan to make its $15,000 down payment.

After five years, if the buyer still lives in the home and has paid on its primary mortgage as agreed, its lender will write-off the second, smaller $15,000 mortgage with no interest due and no payments made. The loan is forgiven and its lien removed from title.

Municipal governments and communities like forgivable mortgages because forgivable mortgages promote long-term homeownership, neighborhood involvement, and community investment. If you’ve ever heard of cities paying people to move there, you’ve seen forgivable mortgages in action.

More resources

If you'd like to learn more about buying a multifamily property, download my free ebook here. You can also grab my Ultimate Multifamily course as well. Here is a special discount link for you! My course has helped people all across America purchase their first or second multifamily property! 


Source: https://homebuyer.com/learn/first-time-home-buyer-grants-programs 


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