1st Time Home Buyer Down Payment Grant

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1st Time Home Buyer Down Payment Grant

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Down Payment Assistance

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The first-time buyer program, known as the Down Payment Fairness Act of 2023, fulfills a campaign promise of the Biden administration: helping Americans buy quality homes.

First introduced as the Capital Act of 2021, the bill expired in the last session of Congress. Then, in early 2023, after President Biden’s 2024 budget proposal allocated $100 billion to the grant program, the First Buyer’s Bill was reborn.

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On June 21, 2023, elected officials H.R. 4231: Reintroduced the $25,000 cash assistance bill for homebuyers under the Home Equity Down Payment Act of 2023.

The purpose of the Home Equity Advance Act is to “provide first-generation down payment assistance to address generational disparities in access to homeownership and to reduce and ultimately close the racial gap in homeownership in the United States and elsewhere.”

In plain language: the government wants to bridge the racial wealth and home ownership gap by providing first generation cash grants.

This article simplifies the Home Equity Down Payment Act to show qualified first-time buyers how to get a cash grant and when to expect the bill to pass into law.

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Effective December 12, 2023, the $25,000 First-Time Homebuyer Grant Program is an Act of Congress 2023-2024. The bill replaces the Capital Improvement Act of 2021 (H.R. 4495), which expired at the end of the last session of Congress.

Representative Maxine Waters has written past and present versions of the House capital bill. Sen. Raphael Warnock wrote the Senate version of the bill before the last Congress.

Until then, buyers can consider a conventional 100% mortgage, which offers 100% financing and closing costs to first-time buyers at discounted mortgage rates.

The Down Payment Equity Act gives qualified homebuyers up to $25,000 in cash for down payments, mortgage closing costs, interest rate reductions based on discount points and other home buying expenses.

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Home equity loans cannot be used to purchase a second home or rental property, and all home buyers must qualify for the program.

The Home Equity Down Payment Act is designed to help first-time homebuyers buy homes, put down roots and grow their family’s wealth.

Real estate is worth $21 trillion, making stocks the largest source of wealth in the United States.

Homeowners today are mostly white. The home ownership gap between white and Hispanic families is currently 25 percent, and the gap between white and black families is currently 30 percent.

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The Capital Advances Act provides equal opportunities for disadvantaged groups. It is the strongest piece of housing legislation since the Fair Housing Act of 1968 and the Housing and Urban Development Act.

The stock advance bill is not yet law, so when we discuss the bill’s eligibility requirements, we must add a caveat that the bill’s language is not final and may change before the bill passes.

Effective December 12, 2023, the Home Equity Advance Act of 2023 requires home buyers to meet the following requirements:

Eligible home buyers must not have co-signed a home or mortgage within the past 36 months. Tenants who have owned the home for more than three years qualify as first-time home buyers.

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Eligible homebuyers’ parents or legal guardians may not have owned the home within 36 months prior to purchase. This requirement is waived for all homebuyers who previously lived in a nursing home.

Eligible homebuyers must have an income greater than 20 percent of the metropolitan area median income. For example, the median income in Orlando, Florida is $80,100, and homebuyers must earn $96,120 or less per year to claim a down payment.

Income exemptions are offered in high-cost areas such as New York, Los Angeles and other cities with high costs of living.

In high-cost areas, qualified homebuyers must have incomes greater than 80 percent of the area median income. In San Francisco, the area median income in 2023 will be close to $166,600. Therefore, to receive $25,000 in government cash assistance, homebuyers must earn $299,880 per year or less.

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Qualified homebuyers must use a mortgage from one of five government mortgage agencies – Fannie Mae, Freddie Mac, FHA, VA and USDA. These institutions allow no down payment (USDA and Virginia), 3 percent down payment (Fannie Mae and Freddie Mac) and 3.5 percent down payment (FHA).

The Home Ownership Act requires home buyers to complete a state-approved home ownership education course. Courses can be completed in 90 minutes and have been shown to reduce mortgage default rates.

The Home Equity Down Payment Act of 2023 provides financial assistance for first-time home buyers. It is not a loan or tax credit. It is a cash payment made to eligible buyers at closing for direct application to the purchase transaction.

The standard cash prize for first-time home buyers is twenty thousand dollars, with an additional five thousand dollars available to “socially disadvantaged people”.

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According to the law, a socially disadvantaged person is anyone who identifies as Black, Hispanic, Asian American, Native American, or any combination thereof, or who has been subject to racial, ethnic, or cultural bias because of their identity as a member of groups. Individuals regardless of their characteristics.

For example, a cash grant of $25,000 could be split into a down payment, a lump sum for closing costs, and cash to buy your mortgage interest.

The Act requires homeowners to live in their homes for five years. Buyers who change residence or sell within 60 months lose a portion of their original financing.

Exceptions to the reimbursement rule exist for military deployments and other regular situations. Your mortgage lender can explain your options.

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When the Capital Advance Act becomes law, the cash contributions will be automatic payments sent to your settlement or escrow account. Your mortgage lender will facilitate the loan granting process and complete your required forms.

However, if you need cash help today and can’t wait for the Home Equity Down Payment Act to become law, consider other down payment assistance programs for first-time buyers, including local tax credits and low-rate mortgages.

The Home Equity Advance Act likely won’t become law before the end of 2023 because getting homebuyer grants requires coordination among multiple state agencies and a congressional budget hasn’t been made law.

Once passed, Congress must set rules for how the federal government distributes grants to states and how states distribute money to local property corporations. These rules are required before the first payment is made.

What You Need To Know Before Getting A Home Loan

On June 21, 2023, Representative Maxine Walters introduced the Capital Advances Act of 2023 as H.R. 4231. No equivalent bill yet in the Senate.

Since the first version of the article was published in 2021, readers have asked many questions about the capital advance law. Here are some common ones.

What has changed in the Equity Payment Act of 2023 compared to the Equity Payment Act of 2021?

The 2023 version of the STOCK Act simplifies the definitions of first-time homebuyer and first-generation homebuyer and proposes distributing grant funds to states based on need. In addition, the current and previous versions of the law are almost identical.

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Is the $25,000 First Time Home Buyer Grant the same thing?

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