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How to Save on Your Down Payment with an FHLB Grant

We all dream of our perfect home. Maybe yours has a spacious backyard for your pets to roam. Or perhaps it’s an apartment with a nice view of the sunset each evening. While it’s easy to visualize what you want your house to look like, the financial aspect might seem more out of reach.

As we often discuss on our blog, there are more ways than ever to achieve homeownership today, no matter where you are in your personal financial situation.

In this post, we will introduce you to the FHLB Grant program, its history, how to qualify for it, and how it can help reduce your principal, down payment, and closing costs.

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WHAT IS THE FHLB?

The Federal Home Loan Bank Act (FHLB) was passed and enacted in 1932 by President Hoover amid the Great Depression. The Act created Federal Home Loan Banks (FHLBanks), a network of 11 regional banks that act as wholesale suppliers on lendable funds. More simply, that means the FHLBanks provide funds to local financial institutions for them to lend to you in the form of a mortgage.

The structure of the FHLBanks is important because it ensures local banks have access to funds to be competitive and offer a variety of loan programs to buyers.

WHAT IS AN FHLB GRANT?

FHLB Grants are available to qualifying homebuyers and can be used to reduce your principal, go towards your down payment or closing costs, and cover rehabilitation costs.

These FHLB Grants are authorized through the Affordable Housing Program (AHP), so you may see them also referred to as AHP Grants. The AHP was created in 1990 and is funded by the FHLBanks. Each bank contributes 10% of its earnings to its AHP, with the intention of helping low and moderate-income households achieve homeownership.

HOW DO YOU QUALIFY?

FHLB Grants are available to first-time homebuyers, community partners, veterans, and returning veterans.

† Ask your First Heritage Mortgage loan officer for a list of all qualifying Community Partners employee roles.   ‡ Speak with your First Heritage Mortgage loan officer to learn if your occupation meets the qualification of a COVID-19 related essent…
† Ask your First Heritage Mortgage loan officer for a list of all qualifying Community Partners employee roles.

‡ Speak with your First Heritage Mortgage loan officer to learn if your occupation meets the qualification of a COVID-19 related essential worker.

To qualify for owner-occupied grants, which means the house will be your primary residence, your household income must be 80% or less of your county’s median income.

There are also grants available for rental properties where at least 20% of the units will be affordable for and occupied by very low-income households, defined as incomes at 50% or less of the median county income.

Additionally, there are designations like community partners, which include vital community members who help others for a living. Law enforcement, educators, health care workers, firefighters, and other first responders fall into this group. For more information on how to qualify for this group, it’s best to speak with a loan officer, as they are experts on these programs.

HOW MUCH CAN A GRANT SAVE ME?

The programs we offer at First Heritage Mortgage provide low-to-moderate income families and individuals between $7,500 and $10,000 towards their home purchase.

To give you a real-world scenario, take a look at how a homebuyer in Maryland could save $21,777 on their closing costs through the Maryland Mortgage Program (MMP), a provider of FHLB Grants. They then need to put down just $2,096 and their monthly payment goes up by only $80.

*More details about this scenario can be found in the Disclaimers section at the bottom of this post.
*More details about this scenario can be found in the Disclaimers section at the bottom of this post.

Whether you take advantage of an FHLB Grant, or another program, it’s important to know that many programs are available to help you achieve your goal, and you don’t have to find them on your own.

Connect with a First Heritage Mortgage loan officer who will review your personal financial situation and position you to take advantage of the best loan program for you.