Proposed $25,000 Grant for First-Time Home Buyers Remains Under Congressional Review
- Author: Margaret Hills
- Posted: 2024-12-16
This grant aims to cover initial home-buying expenses such as down payments, closing costs, and reducing mortgage interest rates.
The primary goal is to make homeownership more accessible, especially for individuals from moderate- and low-income backgrounds.
Current Status of the Act
As of December 2024, the Downpayment Toward Equity Act has not been enacted into law. Initially introduced in Congress in 2021, it remains under consideration.
In March 2023, the White House's fiscal year 2024 budget proposal included $175 billion for affordable housing, with $10 billion allocated for first-time home buyer grants. Despite these developments, the Act is still pending approval.
Eligibility Criteria
If the Act becomes law, potential beneficiaries must meet specific requirements:
- First-Time Home Buyer: Applicants should not have owned or co-signed on a mortgage in the past three years.
- First-Generation Home Buyer: Applicants' parents, legal guardians, spouse, or domestic partner must not have owned a home in the past three years. This requirement is waived for individuals who have lived in foster care.
- Income Limits: Eligible applicants should earn less than 120% of the area median income, with higher thresholds in high-cost real estate markets.
- Property Types: The grant can be used to purchase single-family homes, condos, manufactured homes, or multi-unit properties (up to four units) if the buyer occupies one unit.
- Mortgage Types: The grant would apply to conventional loans backed by Freddie Mac or Fannie Mae, as well as FHA, VA, USDA, and Section 184 loans.
- Residency Requirement: Recipients must live in the purchased home for at least five years to avoid repaying the grant.
- Homebuyer Education: Completion of a HUD-approved homebuyer education course is mandatory.
Alternative Assistance Programs
While the Downpayment Toward Equity Act is pending, other programs are available to assist first-time home buyers:
- Down Payment Assistance Programs (DPAs): These offer financial aid through grants, deferred loans, second mortgages, closing cost assistance, and tax credits to help cover initial home-buying expenses.
- Government-Backed Loans: Options like FHA and USDA loans are favorable for first-time buyers due to their low down payment requirements.
Frequently Asked Questions
- Is the $25,000 grant currently available? No, the Downpayment Toward Equity Act has not been passed into law as of December 2024.
- When will the grant be available? The timeline for the Act's approval is uncertain. Prospective home buyers should monitor official updates for any changes.
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