Buying a home for the first time requires so many factors to consider. And one of the most essential things is having enough funds for a down payment. But no worries if you are not ready financially at the moment. Have you heard about the opportunities provided by the downpayment Toward Equity Act, and how do they work in 2023?
The down payment Toward Equity Act of 2023 seeks to assist homebuyers in building wealth through homeownership. This bill can usher in a new era for renters who have struggled to make that first step into homeownership.
If you are a homebuyer for the first time, you are entitled to receive a $25,000 grant thanks to the Down Payment Toward Equity Act!
It is also known as the $25,000 First-Time Buyer Home Grant. The Act would deliver some of the down payment assistance Biden promised homebuyers throughout the past year.
What is The Downpayment Toward Equity Act?
The down payment Toward Equity Act is a kind of legislation that will establish a grant program to provide $25,000 to homebuyers meeting certain criteria. This money can be used as a down payment and other home purchase assistance.
It is important to understand that this grant is not a loan or a tax deduction.
This cash payment made to eligible buyers at closing will be applied directly to the purchase transaction. It is intended to provide down payment assistance to first-generation homebuyers to address multigenerational inequities in access to homeownership, narrow and ultimately close the racial homeownership gap in the United States, and for other purposes.
What is the Downpayment Toward Equity Act of 2023?
The Down Payment Toward Equity Act allows first-time homebuyers to receive $25,000 in cash. You can use this amount for various home-buying expenses, such as a down payment, closing costs, interest rate reduction, and other related costs.
To qualify for the program in 2023, you must:
- Be a first-time home buyer
- Be a first-generation home buyer, have a parent or guardian who defaulted on a mortgage
- Have a low or average income in your area of residence
- Buy a house as your primary residence
- Use a state-backed loan
- You will not be able to buy a second home or a rental home using the Down Payment Toward Equity Act
How to apply for the Down Payment Toward Equity Act
So many people who rent properties dream of buying their first houses. But the real estate market prices are so high that this dream can hardly become a reality soon. And this is where the Act can help you to move closer to your home buying goals.
But how do you know if you qualify?
To receive this grant the homebuyer must meet the following five key requirements:
Meet income limitations
To qualify for a grant you should have an income that does not exceed 120% of the median income for the area you live in or the place where you would like to buy a home.
Be the first-time homebuyer
In fact, being a first-time homebuyer doesn’t mean the requirement to never own a house. You shouldn’t be a homeowner for the last three years in order to be considered a first-time homebuyer.
A first-generation homebuyer
You will be able to receive the grant if your parents or guardians never owned a home during your life and if your spouse has not owned a home in the last three years.
Buy a home as a primary residence
Make sure you buy a home that will be your primary residence. It is not possible to qualify for a grant if you plan to make money with investment property.
Use a federally backed mortgage
It is required to use a federally backed mortgage Fannie Mae or Freddie Mac.
What should I do to get the money?
- Apply for a grant
- Wait for an application review
- Get the funds
Under this law, homebuyers do not need to take action to collect their down payment. Mortgage lenders will do this for you automatically. All you have to do is buy a house, show up for closing, and the money will be there waiting for you. Homebuyers using the program must participate in a home purchase consultation with a government-approved advisor.
1. What has changed in the Down Payment Toward Equity Act of 2023 compared to 2021?
The new version of the Down Payment Toward Equity Act of 2023 simplified the concepts of “first-time homebuyer” and “first-generation homebuyer.” Also, the law proposes distributing subsidies between the states depending on the needs.
2. When will the down payment toward equity act pass?
So far, the exact date of adoption of the law can not be called. If you look at this program on the Congress’ website, it includes a handy tracker that outlines all the steps a bill goes through on its way to becoming a law. First, the bill needs to be introduced, then it needs to be voted on and passed by the House and by the Senate. Once it passes both votes, it makes its way to the president to be signed and become a law.
Once the bill becomes the law, the program proposed in the bill can become available to you.
Follow the updates of our blog to be aware of the news about the adoption of this law.
3. What will happen if you move within five years?
Since it is a grant and the money doesn’t have to be repaid, there is a requirement not to sell a house within the first five years. Otherwise, the funds will have to be rapid by the homebuyer.
Here are some more details on this:
- You should return $25,000 in case you move or sell after the first year
- You should return $20,000 in case you move or sell after the second year
- You should return $15,000 in case you move or sell after the third year
- You should return $10,000 in case you move or sell after the fourth year
- You should return $5000 in case you move or sell after the fifth year
4. What are some other mortgage programs for first-time homebuyers?
Buying a home for the first time is a very important and life-changing step. Make sure to learn all the details to understand the process, or contact us for free support.
There are some similar programs.
- The First-Time Homebuyer Act
- The Uplifting First-Time Homebuyers Act
- The Housing is Infrastructure Act
- The DASH Act
Make sure to follow the information since it is frequently updated. You can get all the news about these programs from LBC Mortgage.
Moreover, our team is ready to discuss the opportunities for you and offer even more unique home buying loan programs developed considering your financial situation and personal goals.
As far as you can see this program is still waiting for a vote. And this waiting game can be worth it. Getting an additional $25,000 as a grant can make someone’s dream a reality. If you have the time to wait that is great. Stay in touch to get all the updates on the program’s progress!
Tired of waiting? Request a free consultation today and we will discuss the opportunities for you!