Grants to Help First-Time Home Buyers With Closing Costs

Reader Question: Is there any money to assist first-time home buyers with closing, such as grants?

There aren't as many grants available these days, as a result of the economic crisis we are in. Many of the organization that provided grant money to first-time buyers are feeling the effects of the recession, just like the rest of us. So the grants are harder to come by.

That doesn't mean they're not out there to be found. It just means you'll have to do more homework in order to find them. This blog post from September 2008 offers some tips on finding home buying grants. The best place to start is with your state. Different states offer different types of programs for first-time buyers, so that's where you should start.

The federal government is focusing most of its effort and funding on homeowners who are at risk of foreclosure. They're not as focused on first-time buyers right now -- they're trying to stem the tide of home foreclosures that has reached record levels. But there is a tax credit for first-time buyers that extends through July 2009. Here's an overview of the tax credit program, and here's some information on who is eligible for it.

It should be noted, however, that the tax credit is more like an interest-free loan than a grant, because it must be paid back in installments starting the second year after the home purchase. The National Association of Realtors is currently lobbying to eliminate the payback requirement, and also to extend the tax credit program beyond July '09.

Hope that helps. Good luck.