The Federal Home Loan Banks (FHLB) program has increased their offered grants for 2023, offering down payment assistance for qualified buyers. Nationwide, housing prices and mortgage rates have risen, straining many homebuyers’ already tight budget. The FHLB products offered for first time homebuyers and other qualified home buyers have been adjusted to meet the current market trends. The Federal Home Loan Banks offer two affordable housing programs through affiliated lending institutions: The Competitive Application Program and The Homeownership Set-Aside Program. The Homeownership Set-Aside Program offers lenders funds that can be used as down payments, closing costs, or counseling assistance to homebuyers, or rehab assistance to current homeowners. The funds designated for these programs are only applicable to purchasers who meet low to moderate-income ranges for their area income.
For 2023, the FHLB Affordable Housing Homeownership Set-aside Program products were enhanced to add funding where it’s needed most. The first-time homebuyer product subsidy increased from $7,500 to $12,500 and the Community Partners product subsidy increased from $10,000 to $15,000. The subsidy for the community restore and rebuild program stayed at $10,000. First-time homebuyers must meet certain criteria, but can include victims of catastrophic loss or natural disaster. Community partners are defined as currently employed or retired law enforcement officers, educators, health care workers, fire fighters, first-responders, veteran, active-duty military, and essential workers.
These funds can be used for reducing principal as well as assisting down payments, closing costs, or rehabilitation costs. In addition to income parameters, borrowers may have to complete a homebuyer counseling program and sign agreements that they will own and occupy the home for at least five years. The homebuyer must contribute at least $1,000 toward the transaction, and can receive no more than $250 back at closing. To view all of the requirements and find a qualified lender for these programs, visit www.fhfa.gov.