Housing grants are free funds recipients can put towards home-related costs. From down payment assistance programs to renovation loans, homebuyers and homeowners can locate options to help them finance their home goals.
Homeownership is expensive, but financial assistance is available whether you want to buy or renovate a home. Grants and loans have different requirements, and you will need to prove you qualify when you apply to the program.
The US Department of Housing and Urban Development (HUD) has several programs to help homebuyers and owners afford housing. It also provides comprehensive information about home economics and keeps costs down.
The biggest HUD housing assistance program it runs is the Section 8 (or Housing Choice Voucher) Program, which reduces rental costs for qualifying tenants. However, the Section 8 voucher program can also help enrollees purchase a home.
Homebuying vouchers are not available as readily as rental vouchers. Beneficiaries who live in Public Housing Agencies that participate in the program may receive housing assistance in one of two ways:
· Housing subsidies reduce the monthly obligation of homeowners. The voucher cannot be more than it would be for a rental, and the specific amount will depend on the applicants’ location, income, and housing costs.
· Down payment assistance is available for qualified applicants who opt for a one-time lump sum instead of monthly assistance.
HUD also provides information about other government programs that make homeownership more accessible. You can contact your local Public Housing Agency (PHA) for more information about the homeownership vouchers and other programs.
If your income is too high for assistance from HUD or the HCV program, you may qualify for financing backed by the Federal Housing Administration.
The Federal Housing Administration (FHA) is part of HUD and backs home loans, making it easier for applicants to afford homeownership. For instance, FHA down payment assistance is not a payment but a mortgage requirement reduction.
Traditionally, homebuyers would need a 20 percent down payment for lenders to finance the other 80 percent of the purchase price. However, soaring prices make it almost impossible to save that amount when the national median home costs $374,900, and that down payment would be $74,980.
FHA-backed home loans have better terms, like lower down payment requirements and interest rates. Lenders are able to offer these terms and rates because the FHA insures against loan defaults.
Borrowers with lower credit scores are more likely to qualify for an FHA loan than a conventional loan. This may save them money on additional fees.
Types of FHA loans include:
- FHA purchase loans are for homebuyers to finance a home. If the borrower defaults on the loan, HUD will take possession.
- The Section 504 home repair program can finance repairs and renovations for new and current homeowners.
- The Section 203k loan is also for home improvements and construction costs. Borrowers must request a minimum of $5,000
HUD homes are properties the government took when the borrower defaulted on their FHA loan. HUD houses for sale are typically priced well-below market value, but the government sells them ‘as is.’
Your state may have a first home owners grant that stems from HUD or FHA financial backing. For example, the town of Fairfield in Connecticut has up to $30,000 for down payment assistance and $2,500 for closing costs for first-time buyers.
You may have an easier time looking for grants for home weatherization projects.
Not all housing programs are first-time home buyer grants, as you can find local utility programs that can help cover the cost for repairs and weatherization. The Weatherization Assistance Program (WAP) gives qualifying homeowners grants to improve or repair their homes’ energy efficiency.
Energy-efficiency grants can pay for your upgrades and repairs as well as save you money down the line. On average, the annual energy savings for homes in the WAP is $283.
Proper heating and cooling systems also cut down on other expenses, like medical bills. The weatherization methods make homes more habitable, leading to fewer illnesses. Some weatherization measures include:
- Cleaning, repairing, and replacing heating and cooling systems.
- Insulating ducts, water heater tanks, and heating pipes.
- Repairing and replacing windows, doors, and insulation.
- Installing programmable thermostats, low-flow showerheads, and energy-efficiency appliances, like refrigerators
The program considers the entire house for energy efficiency. For instance, the US Department of Energy (DOE) would not approve funds for new insulation if the roof leaks.
You may be able to request grants from The Department of Veterans Affairs if you are a qualified former service member.
You can apply to The Department of Veterans Affairs (VA) for housing grants if you or an immediate family member have been in the armed services. The VA offers housing help to veterans, including grants and loans to buy, refinance, or modify a home.
VA down payment assistance and renovation programs have service, credit, and income requirements. In almost all cases, for instance, you must have an honorable discharge.
The VA has grants on the bias of age, disability, and need. Some of the VA housing assistance programs include:
- Disabled Veteran Housing Assistance; Specially Adapted Housing (SAH) grant, Special Housing Adaptation (SHA) grant, and Home Improvements and Structural Alterations (HISA) grant
- Home purchase loans; direct home loan, VA-backed home loan, and Native American Direct Loan (NADL) program
- Refinancing options; Interest Rate Reduction Refinance Loan (IRRRL) and cash-out refinance loan
- Housing benefits for family members; purchase and refinancing loans
You can contact your local VA office to learn more about benefits and housing assistance. If you live in a rural area, you may qualify for more different government grants.
The US Department of Agriculture (USDA) Rural Development (RD) has housing grants and programs to help cover the cost to buy, repair, or refinance your home. You can also build your own house with some of the Single Family Housing Programs.
You can only qualify for a USDA RD program if you live in an eligible rural area. Your income will also influence which grant and loan options you can receive.
- Low and Very Low-Income Homebuyers can apply for a 33-year, fixed-rate direct loan from USDA. Depending on the financial situation, applicants may receive payment assistance.
- Moderate-Income Homebuyers can apply for a USDA-guaranteed, 30-year, fixed-interest rate loan through USDA-approved lenders.
- Low and Very Low-Income Homeowners can apply for repair loans directly from USDA with zero percent down and at low-interest rates. Applicants 62 years of age or older may qualify for a grant they do not need to pay back unless they sell the house within three years.
- Homebuyers with existing USDA loans can refinance loans from USDA-approved lenders.
You can contact your local USDA Rural Development office if you are a low or very low-income home buyer or owner. You should contact a local USDA-approved lender to start the application process.