First Time Home Buyer Grants, What are They and How Do They Work?

For many, finding first time home buyer grants is one of the biggest hurdles to jump. When you create a new mortgage, the new Loan to Value (LTV) is decided by the amount of down payment you put into the transaction.

On this page we want to explore grants and down payment assistance programs (DPA). You need to know what they are and how they work. When it comes to help with down payments, there are 2 basic kinds. First time home buyer grants are different than down payment assistance programs (DPA).

FIRST TIME HOME BUYER GRANTS, HOW THEY WORK

When you think of first time home buyer grants, you naturally assume that it represents a gift or some form of charity. In a sense that is true. However, first time home buyer grants come with a little catch. In most cases (not all) there are certain limitations on grants for first time home buyers.

For example, some local agencies may be the source of the grant. What they do is put up your down payment money and require you to pay it back when you sell your home regardless of how long you live there. Others may have time limits on how long you live in the home. Some have 5-7 years and the grant for first time home buyers is forgiven and you never have to pay it back.

There are so many different agencies both Federal and State that have first time home buyer grants that space will not allow us to elaborate on this page without putting you to sleep.

The American Dream Downpayment Assistance Act (ADDI) authorizes up to $200 million annually for fiscal years 2004 - 2007. ADDI will provide funds to all fifty states and to local participating jurisdictions that have a population of at least 150,000 or will receive an allocation of at least $50,000 under the ADDI formula. ADDI will be administered as a part of the HOME Investment Partnerships Program, a formula grant program.

DOWN PAYMENT ASSISTANCE PROGRAMS

Down Payment Assistance (DPA) programs work a little differently. Again there are many of these agencies out there that service the entire United States. They are charities themselves. They will put the down payment on the closing table for you, however the seller will need to make a charitable contribution equal to your down payment amount plus an administration fee.

This is really not a grant for first time home buyers. You need to look at it this way. You borrow the down payment money from the lender, then give it to the seller so he can make the gift to the charity. Since this is what’s called a non-interested third party in the transaction, that’s what makes this legal. I call it a legal way to launder money. The lenders know how this works and as long as their guidelines allow first time home buyer grants then everything is alright.

WHICH IS BETTER, GRANTS OR DOWN PAYMENT ASSISTANCE?

However, the DPA programs actually are not as good as the grants because you are buying a house with NO MONEY DOWN and you will close on the house with no equity. At least with a grant, you have equity when you close and may not have to pay it back.

In order for you to understand how down payment assistance programs work click here assistance for first time home buyers.

IT TAKES WORK, ARE YOU READY?

First time home buyer grants are much harder to find and may not be available in every community. You’ll need to search your local charities and government agencies to find out if they offer a grant for first time home buyers.

There's also information you can purchase on how to request a grant for first time home buyers. Personally I feel it's a big waste of money.

Again, there are so many different ways to make this request. Knowing how is important. You have to say and do just the right things.

If you would like to learn more how to request first time home buyer grants, you've landed on the right page.

HERE'S WHAT TO DO

If you want additional information on the process for first time home buyers, how to get access to the grants, request a FREE copy of our E-Book. This E-Book has been sold ($19.95 value) and distributed over the internet for the past few years to thousands of people just like you.

For a FREE copy of our 14 page E-Book "10 Cricial Steps for First Time Home Buyers" simply fill out the form below. Follow the directions onscreen and in your e-mail box. This is a double opt-in form.

We explain further about first time home buyer grants, and many other first time home buyer programs.

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