Are there any government grants for first time home buyers? Many people asked us this question a lot. If you have a plan to buy a new home and you are a first-time buyer, the government is ready to help.
Back in November 2022, there were many first-time buyers got their automatic discount. This offer lowered their mortgage rates by 1.75% and they could purchase a more affordable house.
Moreover, the government provides nine housing programs. The goal is to provide more affordable homes and inclusion:
- 3 programs to propose tax credits for the first-time buyers
- 2 programs to provide cash grants for the first-time-buyers
- 2 programs lower the mortgage rates for first-time buyers
- 1 program forgives the existing loan debt for students as first-time buyers
- 1 program provides tax breaks for savings related to a down payment.
Are There Any Government Grants for First Time Home Buyers [Update]
In this article, you will get complete information about nine programs for the first-time home buyer. So, before buying a new home, it is better to use this information to help you decide:
1. Government Grants for First Time Home Buyers – FHFA
The announcement of this program was on October 22, 2022. Meanwhile, the program is effective on or after the beginning of December 2022.
When you apply for this FHFA first-time home buyer program, it offers an automatic interest rate reduction only for eligible buyers. The sponsor behind this program is Fannie Mae and Freddie Mac. It works by lowering the conventional mortgage rates by about 1.75%. Here are the eligibility standards to apply for this program:
- You are a first-time home buyer
- You must be buying a primary residence
- You must move within 60 days of the closing
- You must be a low- or middle-income first-time home buyer in your area
- You must take funds with a traditional mortgage.
If you are qualified, you will automatically receive the FHFA mortgage rate discount. To determine the amount of your total discount, present your income and your credit information as part of your mortgage pre-approval.
2. First-Time Homebuyer Act
The date of the initial release for this program is the end of April 2021.
If you are one of the eligible first-time homebuyers, you will get a refundable federal tax credit for up to $15,000 under the First-Time Homebuyer Act, or it is popular as the First-Time Home Buyer Tax Credit.
The following are the minimum requirements for program eligibility:
- You are a first-time homebuyer.
- You cannot exceed the limitations on income and price.
- There is no permission to purchase second homes and rental properties.
- You must be at least 18 years old or married to someone at that age.
- You must purchase a house from a stranger.
The $15,000 First-Time Home Buyer Tax Credit has been launched and you still have to receive a vote.
3. Government Grants for First Time Home Buyers from Equity Act
The introduction of this program is on April 14, 2021, and the most recent action is on June 22, 2022. The Committee on Banking, Housing, and Urban Affairs held the hearings at that time. First-time homebuyers will get a cash grant for about $25,000 based on the Down payment Toward Equity Act, or popular with the $25,000 First-Time Home Buyer Down payment Grant.
You can use the grant cash to pay the mortgage, general expenses, real estate closing costs, mortgage, and other expenses. The following are the minimum requirements for program eligibility:
- You are a first-time home buyer
- Must meet the income and buy price limitation
- You cannot buy a second home or rent homes. You must use the grant to purchase a primary house.
- You must use a conventional loan, USDA loan, or FHA loan.
- You must have parents or legal representatives who have never owned property throughout their lives like they did so and it was lost to a short sale, you were ever raised in foster care.
The introduction of the $25,000 Down payment Toward Equity Act still needs a vote. Buyers are not eligible for cash grants at this time.
4. Uplifting First-Time Homebuyers Act
The initial release of this program is on June 24, 2021, and the most recent action is on June 24, 2021. This program is a tax incentive, which means the eligible first-time home buyer can use the allocated money to purchase a new home.
The existing rule allows eligible first-time home buyers to take an early withdrawal of up to $10,000 from their 401(k) retirement account without any penalties. Congress also doubled the limit to $20,000 based on The Uplifting First-Time Homebuyers Act.
The following are the minimum requirements for program eligibility:
- You must be a first-time home buyer.
- You must take money out of a 401 (k) retirement account that is not subject to taxes and you must use the funds to buy a house.
This program Act has been proposed, but a vote is still required. As of right now, first-time homebuyers are not eligible for any of its additional tax incentives.
5. Refundable First-Time Homebuyer Credit under the DASH Act
Present in the Senate and is still awaiting a vote. The introduction of this program is August 18, 2021, and the latest action was performed on September 23, 2021. This program is similar to the Decent, Affordable, Safe Housing for All Act, or call it DASH Act. But, it has simpler eligibility requirements.
The DASH Act specifically focuses on income and a lower first-time buyer house purchasing price. The DASH Act provides a refundable tax credit of up to $15,000 to eligible first-time homebuyers who meet the requirements:
- You are a first-time home buyer
- You have to meet the limits on a purchasing price
- You must be at least 18 years old or married to someone at that age.
- A U.S. Citizen
- Your adjusted gross earnings must be $100,000 or $200,000 if married couples.
This program has been introduced but has not yet been voted on. First-time homebuyers are not yet eligible to get a $15,000 tax credit at this time.
6. First-Generation Down Payment Assistance
This is a first-time home buyer down payment assistance for the first generation. The program has been introduced to the House on July 16, 2021, and the latest action of this program was on July 22, 2021.
The Housing is Infrastructure Act of 2021 contains a provision that involves the First Generation Down Payment Assistance program. It offers first-time purchasers with cash grants for about $25,000 for the down payments on homes. So, if you have a question, such as “are there any government grants for first time home buyers?”, you can wait for this program.
Besides, this program is identical to the Down payment Toward Equity Act, but with stricter eligibility requirements. Following the program, all first-time purchasers whose parents or legal representatives do not currently own a home are the term “first-generation home buyers”. For this program, here are the first-time home buyer requirements:
- You are a first-time home buyer
- You must meet the regional requirements for income and purchasing price.
- Purchasing second homes and rental properties is against the rule. You must buy a primary house.
- You need a mortgage supported by the government, for example, FHA, conventional loan, or USDA, unless you have ever been in foster care, and your parents or legal guardians may not own a home right now.
If you want to apply for this program, it has been introduced but still needs to get a vote. At this time, the $25,000 cash grant is not yet ready for first-time home buyers.
7. Build Back Better Act
If you still need more information about this question: “are there any government grants for first time home buyers”, you can learn about Build Back Better Act. This program has passed the House Vote but is still awaiting the Senate Vote.
The date of initial release was on September 27, 2021, and the recent action was on November 19, 2021. This program is a comprehensive stimulus plan to deal with housing, education, climate change, and other issues.
This grant offers cash for up to $25,000 to first-time, first-generation homebuyers for any purchase line-item expense. For example, down payment, mortgage rate reduction, and closing costs. The definition of “first-generation house buyer” is based on law, to refers to all first-time buyers whose parents or legal representatives do not currently own a home.
How to qualify for first-time home buyer grants under the Build Back Better Act:
- You must be a first-time home buyer
- Meet the regional requirements for income and purchasing price
- You must not purchase a second home and rental property.
- You must use a mortgage that works with the government such as an FHA, USDA, or conventional loan
- Unless you have ever been in foster care, you must have parents or legal guardians who do not currently own a home.
The House has approved the Build Back Better Act, but could not meet a Senate vote.
8. Are There Any Government Grants for First Time Buyers – LIFT
The status of this program has been introduced to the house. The date of initial release was on September 22, 2021.
The LIFT Act, frequently known as the LIFT Homebuyers Act offers first-generation renters with modest income mortgage rates below the market. With the same payment per month, the scheme lowers the amount of mortgage interest paid. So, it allows the eligible home buyer to repay their properties in 20, instead of 30 years. This way will accelerate wealth accumulation.
Homebuyers can combine the LIFT Act With other first-time buyer assistance such as the $25,000 Downpayment Toward Equity Act and the $15,000 First-Time Home Buyer Tax Credit.
The following are the minimum requirements for program eligibility:
- The applicant must be a first-time home buyer
- You must meet the area’s income and purchase price limits
- You need a mortgage loan that works with the FHA
Unless you have lived in foster care at any point in your life, you must have parents or legal representatives who do not currently own a home.
The LIFT Act has been introduced but has yet to be voted on. As of today, its lower mortgage rates are not available to first-time home buyers.
9. Transforming Student Debt to Home Equity Act
This program has been introduced to the House on April 1, 2022.
This program assists first-time home buyers with the student loan payment. The bill lowers mortgage rates for buyers, offers a discount on government-owned properties, and provides down payment assistance. It is what you need if you are looking for a first-time home buyer loan.
The program’s minimum eligibility requirements are:
- The applicant must be a first-time home buyer
- Mortgage approval is required
- The applicant must agree to own and live in the new home for three years
- The status of federal student loans is not in default
- Must agree to attend a homeownership class
The program has been introduced but still needs to get a vote. Its low mortgage rates and discounted homes are currently not available for first-time buyers.
10. American Dream Downpayment Act of 529 (b)
The program has been introduced to the House on February 25, 2021, and the latest action was on August 2, 2022. The U.S. Senate has heard about this program.
The American Dream Downpayment Act introduces tax-advanced savings account for down payments. The legislation is based on the Internal Revenue Code Section 529, which allows for a tax-free tuition savings account. This program would take up section 529(b) out of the tax code and initiate savings accounts for first-time home buyers.
Cash deposited into a 529(b) down payment savings account can be withdrawn tax-free. The law allowed the withdrawal from a 529(b) plan at any time if the funds are for purchasing a home. Buyers can use withdrawals to pay for a down payment, real estate closing costs, mortgage, state and local taxes, and closing-day expenses.
The total contribution limit is $129,400 (20% of the base limit of a mortgage loan) the contribution limit depends on inflation. This program has yet to be voted on. Therefore, this saving plan is not yet available.
11. The National Homebuyers Fund
This is a non-profitable public benefit organization that funds home buyers with 5% of a home cost. In exchange for the grant, home buyers must agree to live in the new home and make payments for five years minimum.
If you are a renter, you cannot apply for this grant directly. The one who can do it for you is your mortgage company. To get a list of the joining lenders, you can contact (916( 444-2615.
12. Government Grants for First Time Home Buyers – State and Local Grants
Additionally, you can get cash grants from state and local governments if you can meet their eligibility criteria as first-time buyers. The grant sizes are from $500 to $50,000 and you can use it for mortgage closing costs, home down payments, and mortgage rate reduction.
One of the common criteria from state and local housing grants is to meet the credit rating standards and have an earning lower two quartiles in your area.
Summary
Those are all the answers when you have a big question, like “are there any government grants for first time home buyers”. The first home buyer programs are incentives and mortgage loans supported by federal, state, and local governments for eligible home buyers in the US.
The first-time buyer program offers mortgage rate reduction, closing cost assistance programs and down payment, and state tax and federal tax credits for eligible first-time buyers.
It means that you can now buy a house even though you have no money to pay for a down payment. The housing grants, down payment programs, and forgivable mortgages above can help you buy a home without money down. Eventually, some home buyers can get a 100% mortgage from the USDA and VA programs.
