If you earn less than $115,000 and are looking to buy a home in Philadelphia, you’ll want to pay close attention to this article. One of the biggest challenges to homeownership is assembling enough money for the down payment and working through the mortgage qualification process. The good news is that there are several grant programs that can offer HUGE benefits in down payment and closing cost assistance. Most buyers miss the opportunity to receive grant money not because they don’t qualify, but because they never knew about it in the first place!
Below are some of our favorite grant programs that are being offered in the region right now. Please note that all grant programs have different nuances that limit how and when they can be used. They will either be limited by income, census tract, property type, or a mix of the three.
1. NeighborhoodLIFT with Wells Fargo
The NeighborhoodLIFT downpayment assistance program provides a forgivable, zero-interest down payment loan with no required payments. Eligible applicants use this money for the down payment and closing costs.
Requirements:
- You need to complete an 8 hour homebuyer education course. Access the list of course providers here.
- You do not have to be a first time home buyer
- You must be approved by a NeighborhoodLIFT program-approved lender
- The home you are purchasing must be your only home. If you currently own a home, it must be sold before you close on the new residence with this program.
How to:
- Please reach out to us for assistance and we will put you in touch with our Wells Fargo contact who focuses on this loan product. We find that not all loan officers are familiar with the nuances of this program and it is extremely important that you speak with the right one.
Our take on this program:
- This program is an awesome choice because several national lenders offer it, not just one specific bank.
- The downside to this program is that the funds are often claimed quickly and the number of homebuyers that can receive the funds is very limited. Each homebuyer has 90 days after being approved to make an accepted offer on a home with the received grant. If you aren’t able to find a property, you may lose your funds and have to re-apply.
- We’ve found that underwriting for this program is less stringent than sme of the others. Wells Fargo, one of the banks that offer this program, generally requires a 12-month one-time payment history but you can use trade lines such as rent, cell phone bills, utility bills, etc. as proof which is not the case with the Bank of America program discussed below.
2. Our America’s Home Grant ($7,500) and Our Down Payment Grant Program with Bank of America
There are two grants offered by Bank of America as part of their Community Homeownership Commitment, bringing products and resources that ca help modest-income borrowers. The first is Our America’s Home Grant which offers a lender credit of up to $7,500 that can be used towards non-recurring closing costs, like title insurance and recording fees, or to permanently buy down the interest rate. The funds do not require repayment. The second is the Our Down Payment Grant Program which offers 3% or $10,000 (whichever is less) to be used for down payments. The programs are currently limited to two specific mortgage products and the funds do not require repayment.
Requirements:
- Qualifying incomes vary by location
- You can own one other property when using this grant, however, the property you are purchasing with this grant must become your primary residence.
- The lender needs a minimum of 35 days to close
How to:
- To increase your chances of success in obtaining these grants, reach out to our team for our direct Bank of America contact who has processed loans with both of these grants. We find that not all loan officers are familiar with the nuances of this program and it is extremely important that you speak with the right one.
Our take on this program:
- This program offers the biggest overall benefits (and very generous income guidelines) but also has a few stricter underwriting requirements. Borrowers must generally have at least a 680 credit score and no late payment history for 24 months. Exceptions to this rule can be made but are very rare.
- If you qualify for this program you can buy a duplex but NOT a 3-4 unit building
- The income limit for the down payment grant varies depending on the census tract the homeowner is purchasing in. If you’re in the low to moderate census tract, there is no income limit. If you are purchasing in a moderate or high income tract, you must make less than the number that they set for the area (which is generally close to the Area Median Income).
3. Philly First Home with the City of Philadelphia
The City of Philadelphia’s Division of Housing and Community Development supports residents through this program offering a home buyer assistance grant of up to $10,000 (or 6% of the purchase price, whichever is less) to help first-time home buyers. This grant helps with either down payment and/or closing costs.
Requirements:
- Grants will be provided if the funding is available
- IF you move or refinances before living in the home for 15 years, the grant must be repaid.
- You must be a first time home buyer or someone who has not owned a home in the previous 3 yeas
- Must use the funds to purchase a single family home or duplex in Philadelphia (condos are not eligible)
- There are income guidelines & restrictions depending on household size. See income guidelines here.
How to:
- Go to Philly First Home Website
- Schedule an appointment with a City-funded homeownership agency
- Make sure you have all your income documents verifying your household income before your first meeting – Your total annual household income, The source of that income (employment, SSI, DPA, etc.)., The number of people in your family.
Our take on this program:
- This grant has always been one of the most popular ones because it comes back every few years and has fairly generous income requirements.
- The 15 year refinance/sale restrictions is on the stringent side, but still worth it in most cases considering the amount of the grant. Typically when homeowners refinance later on, they have plenty of equity to do so.
- Don’t forget you can’t buy a condo with this one!
There is a LOT to know about this subject so make sure you’re getting your information from the right sources as you’re making your way through the process. Reach out to our team with any questions and we can talk you through the basics! Happy house hunting!
Lia Martin and Rodney Ross
March 2, 2022