Buying a Home? Grants and Programs to Save Money on Your Mortgage

Buying a Home? Grants and Programs to Save Money on Your MortgageThe desire to buy a house in the US is often broken by the inadequate financial possibilities of many Americans. 80% of the millennial tenants of housing during a recent survey on the apartment rental website Apartment List stated that they would like to buy a house, but most of them admitted that they can not afford it.

However, in the US there are several profitable programs aimed at helping US residents acquire their first home. Their list was collected by the publication Bankrate.

1. Loan under the FHA Guarantee

The Federal Housing Administration is the guarantor of your mortgage, if you take such a loan. FHA is an agency under the US Department of Housing and Urban Development.

FHA support offers an additional level of protection to creditors, which means that your creditor will not suffer a loss if you can not pay the mortgage, which increases the likelihood that you will receive favorable loan terms.

Loans under the FHA guarantee usually have lower interest rates than other mortgages, and also imply smaller first installments.

If your credit rating is from 580 and above, then you can get a mortgage loan under the FHA guarantee with an initial contribution of 3.5% of the house price. If your credit rating is below 580, you can still qualify for a mortgage from the FHA, but the down payment will be at least 10% of the purchase amount.

2. Credit from USDA

Few people know, but the US Department of Agriculture (USDA) has a program to help home buyers.

The program focuses on homes in rural areas, but you do not need to buy a farm or engage in farming in an acquired home.

Many USDA mortgages are provided without a down payment, and loan payments are fixed.

Applicants with a credit rating of 640 points or higher usually get the right to simplified processing of their applications, which requires fewer documents. If your credit rating is below 640 points, you can still qualify for a loan from the USDA, but the lender will ask for additional documentation about your financial situation.

3. Credit of the US Department of Veterans Affairs (VA)

The US Department of Veterans Affairs helps with the purchase of homes for servicemen and veterans.

VA loans are provided with lower interest rates and do not require an initial payment, in addition, this program does not provide the minimum credit rating required to obtain a loan.

If the borrower finds it difficult to make mortgage payments, the VA can enter into negotiations with the lender on behalf of the borrower and agree on a deferral or change of conditions.

4. The Good Neighbor Next Door program

The program Good Neighbor Next Door, sponsored by the Department of Housing and Urban Development (HUD), provides assistance in buying housing for law enforcement officers, firefighters, medical and educational institutions.

With this program, the eligible applicant can receive a discount of up to 50% of the price of a house in regions where the authorities want to increase the number of people or stop their outflow.

On the site of the program you can find participating communities in each state. Under the conditions of Good Neighbor Next Door, the buyer must live in the house for at least 36 months from the date of purchase.

5. Fannie Mae or Freddie Mac

Fannie Mae and Freddie Mac are public organizations that work with local lenders, offering lucrative mortgage options to low- and middle-income families.

Cooperators with Fannie Mae and Freddie Mac lenders offer lower interest rates on mortgages and set up initial installments of 3% of the total purchase price.

6. Energy efficient mortgage (EEM)

Energy-efficient or “green” mortgage is designed to make the borrower make the newly acquired house more environmentally friendly.

The key advantage of this mortgage is that it provides money to create an energy efficient home without the need to make a larger down payment. Additional costs are simply included in the body of the underlying loan.

Under a similar loan comes the installation of double-pane windows, additional insulation or modern heating and cooling systems.

7. FHA Section 203 (k)

This type of loan, backed by the Federal Housing Administration (FHA), calculates the value of the house after it is repaired and fully prepared for living after the purchase. This allows the borrower to get a mortgage that covers all costs associated with acquiring and preparing for a new home.

The initial contribution for such a loan can be only 3 percent.

8. Loan for Native Americans

Since 1992, the Native American Veteran Direct Loan program has been helping veteran natives from various tribes of Native Americans and their spouses to buy houses.

This program does not imply an advance payment or the purchase of a private mortgage insurance (PMI).

This loan provides for a 30-year mortgage with a fixed interest rate, as well as a low cost of early repayment.

9. Local grants and programs

In addition to the various programs provided by the federal government, many states and cities offer assistance in buying a home for those who want to purchase their first home.

Check the website of your state or community for information about housing grants and programs available in your area.

Picture Credit: kreatikar

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