One of the biggest obstacles to homeownership, particularly for middle- and low-income households, is coming up with the down payment. The high cost of rent, utilities, car ownership, health insurance, education, and groceries often leaves little room in the budget to save money for a down payment. While there are many ways to get financial help with your purchase, one of the best options is to apply for a housing grant.
The biggest advantage housing grants have over loans or other forms of financial aid is repayment. Loans accrue interest, which you must pay off. Housing grants do not have to be paid back, but are typically only available if you meet certain income requirements. Most housing grants in the United States either come directly from the Department of Housing and Urban Development (HUD) or an affiliated group which uses HUD funding.
Housing Choice Voucher Program
The Housing Choice Voucher Program is the largest housing grant program in the United States. It is more commonly known by the older name, Section 8 housing. Since it is available in every state and receives the most funding from HUD, it is considered the flagship housing grant program. The voucher program is available to low income individuals and families, senior citizens and disabled residents.
In order to apply for the Housing Choice Voucher Program, you must go through a public housing agency in your state. If your application is accepted, you are assigned a housing agent, who will provide you with your vouchers and help you find an eligible home. The housing vouchers cover the majority of your rental costs. The exact amount it covers changes based on your financial needs. For the most part, the housing grants are used to rent property, but there are some options available if you want to purchase a home.
Applying for the Housing Choice Voucher Program requires submitting detailed financial information for yourself and anyone else who lives in your household. If you are unsure where to apply, you can contact your local HUD office for additional assistance. Depending on where you live, you may be placed on a waiting list after you are accepted. How long you remain on the list depends on the number of applicants in your area compared to the number of available homes. In some of the busier locations, it is not uncommon to remain on the waiting list for months.
Emergency Solutions Grant (ESG)
ESG is a housing grant only available if you recently lost your home. ESG uses emergency funds, which provides much quicker financial support than other programs. Funding for ESG is provided by HUD as well as local housing nonprofit groups in your state. ESG has two purposes. The first is to provide funding so you can quickly purchase a new home. Your local housing groups also operate shelters in the area, giving you a place to stay while you are looking for a new place to live. You can also work with housing agencies to speed up the search process. You can apply for ESG assistance by going through either your public housing agency or working with an affiliated nonprofit group in your area. If you are unsure where to begin, you can contact your local HUD office to find out where to apply.
Good Neighbor Next Door
While the majority of housing grants are based on needs, there are some programs which do not even look at your finances. Good Neighbor Next Door is a grant program decided entirely by your profession. If you work as an emergency medical responder, with a law enforcement agency, as an educator for preschool students up to grade 12 or are a fire fighter, you can apply for the program.
If you are provided with a Good Neighbor Next Door grant, you receive a 50 percent discount on the price of the home. In exchange for the discount, you must agree to live in your chosen home for at least three years. This home must be your primary address. Each area has a list of eligible homes where you can apply the Good Neighbor Next Door grant. The exact number of homes changes depending on where you are applying. If there are multiple applicants accepted into the program, a lottery drawing determines who receives the funding.
National Homebuyers Fund (NHF)
NHF is a nonprofit group that runs several financial assistance programs. One of the ways NHF can help you is by providing a down payment assistance grant. This grant covers up to five percent of your mortgage loan, up to a maximum of $10,000. Eligibility is determined by several factors, including your credit score and financial information. You must also agree to live in the house as your primary address for the next three years.
In order to apply for NHF assistance, you must work with a mortgage lender participating in the program. You can ask your real estate agent for more assistant, or contact NFH directly to find an approved lender in your area. Even if you do not qualify for the down payment assistance grant, NFH can provide other assistance, or at least point you in the direction of other housing nonprofit groups in your state.
