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Housing Grant Program Realities - Part 2

Loans (Continued)
Home and Property Disaster Loans offer loans, instead of grants, to families whose properties were severely damaged or lost in FEMA-verified disasters. The Small Business Association delivers the loans, which can be made in amounts up to $200,000 and carry low-interest rates. Renters and owners can borrow up to $40,000 to replace lost or damaged personal property.

The SBA may be able to refinance a mortgage on a house lost in an FEMA-verified disaster, as long as the amount does not exceed the $200,000 loan maximum. This program only applies to those who lost their primary residence. Second homes and investment properties are not eligible.

These programs provide longer than usual repayment periods, between 33-38 years instead of the 30-year period more standard for other mortgages.

There are not many housing voucher programs available. The one that is most likely to make a difference for most low to moderate-income homeowners, is the Section 8 Housing Voucher Program, which provides low-income individuals with financial support for renting adequate and affordable housing. It's important to note that you cannot use these vouchers toward a purchase. Low-income families may choose to use vouchers, if they qualify, as a way to save money for a down payment.

Other options
A few other options do exist for low and middle-income families.

Buying a HUD Home
When individuals who acquired an FHA loan fail to pay their mortgage, HUD will repossess the house and sell it to recoup the cost. Often, selling at well below market value. If you have cash on hand or can obtain a loan (potentially through the FHA as well), you may be able to score a remarkable deal.

You can search for possibilities using HUD's home search database.

Fannie Mae HomeReady Mortgage
Fannie Mae offers a program similar to that of the FHA, which will allow low-income individuals to acquire a mortgage with a bad credit and a higher debt-to-income ratio.

Property auctions and forfeiture sales
If your family has been able to save a sizable amount of money in anticipation of a down payment, you may be able to use that money on a purchase at auction or for a lower price. Various government organizations will sell and auction repossessed homes. Those homes can sometimes be acquired for very little money down, depending on the situation. Agencies holding these auctions and sales include:

US Customs
US Marshals Service
Internal Revenue Service

Understand the limitations
Comprehending the limitations of these programs is important. You will not be able to find a house completely free. While some grants and programs will offer you an affordable price, or open up access where access was not previously available, you will always need to use some of your money. You must understand your income-to-debt limitations. Never attempt to purchase what you cannot afford, and avoid acquiring a loan with high interest rates and no money down. If you cannot afford to make the payments, do not proceed. If your credit does not allow you to get an interest rate that is acceptable to you, work to build your credit score so you can secure a better rate before going ahead with a purchase.

The reality of housing grant programs is that there are few real “grant” programs, and those that do exist are very limited. Your best option will always be to build your credit score, save money to acquire a suitable house with a decent down payment, and avoid borrowing more than you can afford to pay back.