It may sound too good to be true, but there are grants available for home buyers under certain conditions. These grants can be used to buy down the cost of the home, pay a down payment or help with closing costs. In most cases, these grants are ultimately provided by the federal government, but are usually made available through state agencies. However, there are benefits that act nearly the same as grants that are directly from the federal government.
The main function of government grants for homes is to spur economic activity and community investment by encouraging more people to buy homes. While the U.S. Census Bureau reported 69 percent of people owned homes in 2004, there are many others who would like to own their own homes, but may not be able to because of down payments or other requirements. Grants can help in such cases.
Grants for Home Buyers
Though some guidelines may come down from the federal government, the states may also get to determine what types of grant programs they will offer. For example, some may offer grant programs for military personnel who have been injured in the line of duty. Some may offer programs for low-income families who need some help with the closing costs. Each state may be slightly different.
From time to time, the federal government may offer tax credits for first-time home buyers. These are very similar to grants in that homeowners get money for making the purchase, but only after the purchase is made. In 2009, just such a grant was offered. It provided first-time home buyers with an $8,000 tax credit. So, for example, if a family owed $3,000 in taxes, they would receive a $5,000 refund from the government (see reference 3).
Buying a home is not the only grant available for home ownership. Those who own a home but need to make important improvements or updates may have options as well. The lead-based paint hazard program is one of the most commonly used grants. This grant helps home owners mitigate the hazards of lead-based paint, which is so prevalent in older homes. Income restrictions apply.
In some cases, the grants available for home owners will not be taxable. However, no homeowner should assume that grants are not taxable. Check with your local housing authority or tax professional to determine whether any grants you receive will be taxable. Tax credits, by their very nature, are not taxable.