Becoming a homeowner has a lot of benefits, but it can be a challenge for low to moderate-income families to achieve, especially with a low credit score stained with old or present debts. However, being a homeowner also involves unforeseen expenses, including higher utilities and expensive repairs.
If you are struggling with your finances, putting together the down payment, buying the property or paying for repairs, there are several housing assistance programs available to help. Consider these housing assistance options for you and your family below.
There are several different types of first-time home buyer loans. Often, you won’t necessarily have to be a first-time home buyer, just not a homeowner during a specific timeframe.
Loans secured by the Federal Housing Administration (FHA) means that the FHA reduces the financial risk to lenders, which makes them more willing to lower the requirements they ask from potential applicants and provide more convenient terms, which makes it easier for Americans to get their own home.
You can also combine this loan with housing assistance programs in your local area or state.
Apart from having more accessible criteria, applicants can pay as little as 3.5 percent for the down payment, as long as they have a credit score of at least 580. If they have scores of 500 they could also qualify but they would need 10 percent as their down payment for the loan.
Apart from the score minimum, applicants will also need to meet other requirements, including:
- A steady job
- A good debt-to-income ratio
- Legal residence
- A property that meets the FHA standards
VA loans offer service members, veterans, and their families an opportunity to have their own homes. The VA has four different types of loans:
Purchase Loan: this is the standard loan, with which you can purchase a home.
Native American Direct Loan (NADL) Program: this program is meant for Native American veterans or their spouses, and it can be used for building, buying or repairing a home on federal trust land.
Interest Rate Reduction Refinance Loan (IRRRL): if you need to refinance your VA loan, you can request the IRRL to help you lower your monthly payments or stabilize them.
Cash-Out Refinance Loan: this loan can help you refinance a mortgage backed by the VA that helps provide cash-out options.
Except in cases of a NADL, you’ll get a VA-backed mortgage with another direct lender, not the VA.
VA home loans have lower requirements, in general, related to:
- The state of your credit
- Income and debt-to-income ratio
- Service and discharge status
VA loans offer great benefits to its applicants, including not having to get a down payment for purchasing your home or having to pay mortgage insurance premiums.
One of the biggest challenges for potential homeowners is the down payment. However, there are many types of grants to help home buyers with their down payment.
Programs provide an amount that can be used for a down payment. Some programs also allow applicants to use the funds to pay for closing costs.
Down payment grants are generally provided at a local level, which are mostly provided by NGOs and lenders. Qualifying requirements can vary depending on the program, but the most common requirements are:
- Being a first-time homebuyer
- Meeting the low-income guidelines
- Living on the purchased home as a primary residence
Overall, housing grants don’t need to be paid back, although if you fail to meet the terms of the grant, you may have to repay it in full.
Home repair and improvement housing grants can be essential to home buyers and homeowners. Unexpected repair and improvement costs can quickly add up and may be out of the income reach of owners.
The most popular federal housing grant for home repair and improvement is the Section 504 Home Repair Program. This loan provides very low-income senior citizens with the financial assistance of up to $7,500 to make repairs to the home that relieve a health or safety hazard.
To qualify, you must:
- Be at least 62 or older
- Unable to repay a repair loan
- Have an income of below 50 percent of your area’s median income
- Be unable to obtain an affordable loan
- Be the owner of the home and live in the residence
You can apply for Section 504 by talking to a USDA specialist in your local community.
If you are a veteran or service member with a service-connected disability, you may also qualify for additional housing grants through the United States Department of Veterans Affairs. The Specially Adapted Housing Grant (SAH) is available to those who have a qualifying service-connected disability and own or are purchasing a home.
The grant can only be used towards the cost of repairs or improvements that will make the home more accessible to the needs of your disability, such as installing ramps or widening doorways.
You can apply for this housing grant online or by contacting your local VA office.
Alternatively, you may be able to find housing grants through your state Department of Housing and Urban Development (HUD) office or through your local and county government housing department.
The LIHEAP program is designed to provide utility bill aid and weatherization housing grants to qualifying applicants. To qualify, your household will need to meet income-based requirements determined by your state. However, it’s best to apply for benefits early as funding is limited and only around 20 percent of eligible households can receive help.
In addition to weatherization and help with heating and cooling bills, LIHEAP provides emergency assistance to avoid utility shut offs and to repair or replace heating and/or cooling appliances within the home.
It’s not uncommon for local utilities to provide housing grants and rebates towards upgraded, energy-efficient models of:
- Refrigerators
- Washers and Dryers
- Dishwashers
- Heating and air conditioning units
Additionally, assistance for weatherization upgrades and repairs may be available. Contact your local utility to learn more about the grant and rebate programs they have to offer.