Buying a home can be exciting, but scary. The idea of having enough money for down payments and closing costs can be overwhelming. Thankfully there are free grants that exist to help. Start a search today to find more free grants for homebuyers.
These grants open doors to homeownership for a diverse range of individuals. From down payment assistance to closing cost aid, these grants significantly ease the financial burden, making the dream of owning a home more achievable.
Can I Get a Free Grant to Purchase a Home?
Yes, and believe it or not there’s no catch! These grants, offered by state agencies and nonprofits, are a completely legitimate way to cover a down payment when getting a mortgage. In the United States, over 2,500 down payment assistance programs offer support to homebuyers. These programs, including grants and forgivable loans, help cover down payments and closing costs.1
While they’re often aimed at first-time buyers, low-income families, or disadvantaged buyers, each program has its own eligibility rules. The financial aid provided by these programs can make a significant difference in affordability for potential homeowners, particularly for those who may struggle with large upfront costs.
Various Sources of Homebuyer Grants
Homebuyer grants and down payment assistance programs (DPAs) are offered by diverse sources. Many are provided by non-profit organizations, while a significant number come from state Housing Finance Agencies (HFAs). These agencies receive federal grants annually to support homebuyers with down payments and closing costs, making them a vital resource for those looking to purchase a home.
Special Programs for Specific Professions
One notable program is the Good Neighbor Next Door (GNND), which offers a 50% discount on the list price of homes for qualified individuals, including law enforcement officers, firefighters, emergency medical technicians, and teachers.
This program, targeting homes listed by the U.S. Department of Housing and Urban Development (HUD), is an excellent opportunity for professionals in these fields to secure a home at a significantly reduced cost.
Financial Institutions Offering Assistance
Banks, such as Bank of America, provide substantial aid for qualified mortgage borrowers. Through their Community Homeownership Commitment®, they combine down payment assistance and closing cost help with a low down payment mortgage. For example, their America’s Home Grant® program offers up to $7,500 for closing costs like title insurance, which doesn’t have to be paid back.2
Plus, their Down Payment Grant program provides a grant of up to 3% of the home price (max $10,000) for the down payment in certain areas. And their Affordable Loan Solution® mortgage only needs a 3% down payment with reduced mortgage insurance. Just keep in mind these are subject to specific geographical areas and caps.
Fannie Mae and Freddie Mac Programs
Fannie Mae’s Community Seconds program pairs with its HomeReady loan, providing down payment and closing cost assistance. This program functions as a second mortgage, which may offer deferred payments or even be forgiven. Additionally, Fannie Mae’s HomePath program assists buyers with purchasing REO properties and offers cash assistance for closing costs to those who complete a home buyer education course.
The Freddie Mac Home Possible mortgage loan assists first-time home buyers with lower incomes. This program, requiring only a 3% down payment, is designed to lower barriers to homeownership. The Freddie Mac Affordable seconds program can be used to cover most or all of this down payment, further reducing the financial burden on homebuyers.
Mortgage Credit Certificate Program
The Mortgage Credit Certificate (MCC) program offers tax credits for lower-income families to buy their own homes. It lets homebuyers get a tax credit for part of the mortgage interest they pay, up to $2,000 every year.3
For example, with a $150,000 mortgage at a 4% interest rate and 20% MCC rate, you could get a $1,200 tax credit annually. This program is mainly for first-time homebuyers who meet certain income and price limits and will live in the home.
Zero-Down Payment Options
The Veterans Affairs (VA) and USDA loan programs, while not grants, enable eligible buyers to qualify for a home purchase with zero down payment. For those eligible, like veterans and current service members, VA loans allow buying a home with no down payment and no mortgage insurance. Plus, there’s no maximum loan amount for VA loans, which is a big bonus.
On the flip side, USDA loans are backed by the U.S. Department of Agriculture and are perfect for homes in rural or certain suburban areas. Your income just needs to be within a certain range. Both these programs often have lower-than-average mortgage rates, making them super options for those who qualify.
Take the First Step Toward Owning a Home Today!
Securing free grants when buying a home can greatly alleviate the financial pressures of homeownership. With a range of programs available, from federal and state initiatives to specific offerings by financial institutions, there are numerous options to explore.
Understanding the eligibility criteria and leveraging these resources can make the dream of owning a home more attainable. Start exploring the wealth of grants available to find the right fit for your home-buying journey.
