Good News For First-Timers

Who says a lack of funds or bad credit means you can’t purchase the home of your dreams? Those may have been insurmountable obstacles in the past, but not anymore. New opportunities are emerging nationwide, thanks to a range of innovative mortgage programs to aid first-time home buyers who had been previously locked out of the housing market. From down payment assistance plans to credit workshops, home buying initiatives are sprouting up everywhere.

Stephanie Maddrey reaped the benefits of two such programs. The 37-year-old administrative specialist purchased a $104,000, three-bedroom row house in the Overbrook Park section of Philadelphia in October 2006. Her out-of-pocket costs were just $2,100, largely because she received $5,800 from two different grants earmarked for first-time home buyers.

The first grant came from First Front Door, a community-based initiative in which her mortgage lender, Sovereign Bank, participated. “They gave me $5,000 toward the purchase of my home,” says Maddrey. “I had to attend two informational sessions for two hours each.” As long as she resides in the house for five years, she won’t have to repay the money. However, if she moves out before then, the $5,000 will become a loan with interest.

The second grant for $800 came compliments of the city of Philadelphia Department of Housing. To qualify, Maddrey had to attend a counseling session on home buying, mortgage financing, and credit management. “I got a list of housing counseling places and found one close to where I work,” she explains. “I went there on my lunch break and I was done with the counseling before my lunch hour was up.” Maddrey says that many people either don’t know about these grants or they don’t know how easily they can get them.

During the counseling session, Maddrey found out that her credit score was good enough for her to qualify for traditional financing. She also learned how to steer clear of predatory lending practices.

Many home buyers like Maddrey are finding they qualify for down payment or mortgage assistance. Each year, the U.S. Department of Housing and Urban Development gives states and municipalities money to distribute to low- and moderate-income families to put toward their down payment or closing costs. Potential homeowners can receive up to $15,000. In some cases, the money is made available as a loan that’s forgiven if a home buyer stays in the home for three to five years. Some programs offer up to 10% of the purchase price. To qualify for down payment assistance, a person typically can earn no more than 80% of a region’s median income.

Maddrey came across various programs for home buyers after conducting research online. The first stop for prospective home buyers should be their state housing finance agency. There are 58 such agencies listed on the National Council of State Housing Agencies’ Website at Home buyers can also check with their city’s community development office or mayor’s office about grants and other programs for first-timers. Home buyers shouldn’t overlook their church leadership or local community groups, which