HUD Housing Loans And Grants For First Time Home Buyers

Many US citizens don't know anything about US Department of Housing and Urban Development (HUD) homes. Few among them know about Hud Housing Loans And Grants For First Time Home Buyers. Fewer still know about the definition of a first time home buyer. Therefore it is important for them to obtain much needed education in these important matters.

Federal Housing Administration (FHA), an arm of HUD, defines first time home buyers as individuals who meet any one of the following criteria.

Criteria 1: This includes individuals or their spouses, who have not owned a principal residence in a 3-year period culminating on the date of the to-be-purchased property.

Criteria 2: This includes a now-divorced father or mother, who only co-owned such a residence with a former spouse, during the period of their marriage.

Criteria 3: This includes an individual, who co-owned such a residence with a spouse, but has been displaced from it.

Criteria 4: This includes an individual who has owned such a residence that is of the portable type. Certain regulations apply for this specific criterion to remain valid.

Criteria 5: This includes an individual who owned a home that did not comply with the existing State, model building, or local regulations in force. Further, the cost of such compliance would exceed the cost of construction of a new permanent home that complies with the regulations.

HUD homes are constructed to cater to minorities or to low-income Americans. Obviously, most such eligible first time home buyers cannot afford the luxury of buying HUD homes outright. Fortunately, HUD had the foresight to design both loan programs and grants for their help.

FHA, HUD's agency, insures loans offered by private lenders to eligible first time home buyers and thus reduces the risk of non-repayment by them. FHA also helps borrowers obtain loan amounts that they are eligible for.

It is important to note that not every lender offers FHA loans and that not every lender is approved by the FHA to offer loans. The FHA loan insurance does not automatically guarantee you a loan approval. However, it may increase your chances of getting approved by a mortgage lender.

This does not mean that you won't need a credit check for your funding or finance or even refinance requirements. This is because you must still meet whatever credit-related eligibility requirements are set forth by the lender for FHA mortgages. FHA loan insurance is attractive to lenders because it translates into much less risk.

However, it does not directly infer that your loan cannot go into foreclosure eventually, if you are unable to make your monthly mortgage repayments in a timely manner.

HUD grants for first time home buyers include the American Dream Downpayment Initiative (ADDI) in respect of single family housing.