Access: FHLB Grant for Payment Assistance as a Maryland Homebuyer

How to Secure a Low Down Payment in Maryland with an FHLB Grant

Struggling to afford a hefty down payment as a first-time homebuyer? The Federal Home Loan Bank (FHLB) can offer assistance. In this guide, we’ll delve into the process of obtaining a low down payment with an FHLB grant in Maryland, where we now do football, crabs and mortgages!

What is the Federal Home Loan Bank (FHLB)?

The Federal Home Loan Bank System (FHLB) was created during the Great Depression. It started with the Federal Home Loan Bank Act of 1932, the first of many laws aiming to promote affordable housing. The idea was simple: if banks had cheaper money for mortgages, they’d lend more. This would make it easier for people to borrow money to buy houses, boosting the housing market.

It’s important to note: the FHLB doesn’t provide loans to individuals. Instead, the FHLB System’s network of 11 regional banks primarily lend to other financial institutions to support real estate loans.

In addition, these 11 regional banks situated across the United States, provide essential financial support to banks and lenders for various community needs. They play a vital role in funding projects related to housing, infrastructure, economic development, and individual requirements.

Oversight of the FHLB is managed by the Federal Housing Finance Agency. However, each bank within the FHLB operates with private capital and independence, without relying on government funding, despite the system’s public service-oriented mission under government supervision.

This unique structure allows the FHLB to cater to community needs effectively and efficiently. The collaboration between the regional banks and the oversight of the Federal Housing Finance Agency ensures that financial support is channeled to where it is most needed, benefiting communities across the nation.

How FHLB of Atlanta Has Served Maryland

The FHLB of Atlanta serves Maryland and is in charge of providing liquidity and assistance to Maryland partner banks. It plays a crucial role in providing liquidity management and extending credit for residential and economic development to meet community credit needs. Their Community Investment Program (CIP) and Economic Development Program (EDP) offer flexible and discounted advances to support affordable housing, economic development activities, and projects benefiting low- to moderate-income households and neighborhoods. It has had significant impact in our area for quite some years. Here are a few impressive stats:

• FHLB of Atlanta include 80 member financial partners in Maryland
• 104.1B in advances in Maryland since 2011,
• 87.4M in Maryland Community Investment Programs,
• 5.4M in Economic Development Programs in Maryland,
• Total Affordable Housing Program General Fund since 1990: 64.8M and 12,559 total units,
• Total Affordable Hosing Program Homeownership Set-Aside since 1997: $64.4M and 10,936 Units,
• Total Estimated Jobs Produced Through Affordable Hosing Program since 1990: 53,807,
  These stats were last update on 12/31/2021

FHLB Limitations

First, FHLBanks are only authorized to operate two key programs to support housing initiatives:

• Homeownership Set-Aside Program: FHLBanks offer grants to their financial institution members, who then provide assistance to homebuyers for down payments, closing costs, counseling, or rehabilitation. The establishment of these programs is optional for each FHLBank, with FHFA regulations setting annual limits on fund allocation for set-aside initiatives.
• Competitive Application Program: Financial institution members of a FHLBank can apply for AHP funds on behalf of non-profit or for-profit sponsors. These applications are assessed against others using the FHLBank’s scoring system, with approval granted in descending order based on scores.

Second, FHLBanks must contribute a minimum of 10% of its earnings to it’s AHP (Affordable Housing Program).

• The Federal Home Loan Bank Act (FHLBank Act) directs AHP funds towards assisting low- to moderate-income households in purchasing, constructing, or renovating owner-occupied homes. Additionally, the funds support the development, construction, or refurbishment of rental housing, with at least 20% of units designated for very low-income households.

Understanding FHLB Grants in Maryland

The FHLB grant program is a financial aid initiative aimed at helping eligible homebuyers cover down payment and closing costs. Administered through member banks and credit unions, these grants are typically awarded on a first-come, first-served basis. As many residents already know or come to find out very soon, buying a home in Maryland is not a simple task especially with home prices that have appreciated in record time, inflation, interest rates, incomes not growing at the same rate, and thus any help can be crucial.

Types of FHLB Grants for First-Time Home Buyers

When it comes to FHLB First-Time Home Buyer Grants in Maryland, there are several types tailored to different needs and situations, including:

• Down Payment Assistance Grant. This aids buyers in covering a portion of their down payment. This grant can be a game-changer for those who struggle to save enough for this initial expense.
• Closing Cost Assistance Grant. Buying a home includes various closing costs like appraisal fees and attorney fees, which can quickly accumulate and pose a barrier for first-time buyers. The Closing Cost Assistance Grant aims to ease this burden by providing financial assistance specifically for these expenses.
• Rehabilitation/Repair Grants (offered by some FHLB programs). If you come across an older home in need of renovations or repairs before it’s habitable, this grant can help cover those costs. It’s a great option if you’re willing to invest some effort and transform a fixer-upper into your dream home.
• Grants may also target specific demographics or regions. For instance, some grants may be aimed at low-income individuals or families residing in designated areas undergoing revitalization efforts.

The variety of FHLB First-Time Home Buyer Grants ensures there’s something suitable for every aspiring homeowner’s unique situation and needs. Whether you require assistance with down payments, closing costs, or rehabilitation expenses, explore the available options and capitalize on the opportunities provided through these grants.

The Advantages of FHLB Grants

• No repayment is required.
• Eligibility for additional assistance, such as reduced interest rates or discounted mortgage insurance.
• Securing Long-Term Financial Stability. Homeownership is a vital component of long-term financial strategy. The FHLB grant offers a pathway for first-time buyers to initiate the process of building equity and wealth through owning a home, laying the groundwork for a more stable financial future.

Additional Money Allocated to FHLB Grants in 2023 for Maryland

In 2023, The Federal Home Loan Bank of Atlanta announced an additional voluntary $4 million in Affordable Housing Program (AHP) Homeownership Set-aside funding, giving potential borrowers an opportunity to gain access up to $15,000 towards purchasing or rehabilitation a home. The fund began to be accessible on November 8, 2023, through various programs offered by FHLBank Atlanta.

The First-time Homebuyer Product offers up to $12,500 in assistance for down payments, closing costs, counseling, or rehabilitation related to the purchase or purchase and rehabilitation of an existing home. The Community Partners Product extends up to $15,000 in similar assistance and is tailored for specific professionals, including law enforcement officers, educators, firefighters, healthcare workers, veterans, and essential workers. Additionally, the Community Rebuild and Restore Product provides up to $10,000 for the rehabilitation of owner-occupied homes in designated emergency or disaster areas.

With aspirations of making home buyers dream a reality, Tomeka Strickland, FHLBank Atlanta’s Senior Vice President and Director of Community Investment Services, pointed out the board’s commitment to assisting working lower-income families in navigating the housing market challenges. This could help up to 300 families reach homeownership status.

The AHP Homeownership Set-aside Program funds are exclusively accessible through FHLBank Atlanta member financial institutions on a first-come, first-served basis.

Please note, that this full amount will not be only allocated in Maryland but would be spread throughout the areas covered by the Atlanta branch.

FHLB Grant Eligibility Criteria in Maryland

To qualify in Maryland for an FHLB grant, you must:

• Be a first-time homebuyer, or not owned a home in the past three years.
• Meet household income requirements. These income requirements are different in various parts of Maryland and if you are considered to be in a “targeted” area or not. The PDF linked above will break it down.
• You must be at or below 80% of the Mortgage Revenue Bond (MRB) limit for the county where the property is located.
• Complete a homebuyer education course.
• Have a fully signed purchase contract for a qualifying property in Maryland.
• The eligible property should be your main home. It can be a single-family house, townhome, condo, duplex, multi-unit property (up to four-family units), or a qualified manufactured home (if taxed as real estate and permanently attached to a foundation).
• Contribute at least $500 of your own money towards the down payment or closing costs.
• Have a legally binding five-year retention plan in place. Promising to stay in the home for five years adds security for you and your family as homeowners.

 Follow these steps to apply for an FHLB grant in Maryland:

1. Find a participating lender: Finding FHLB First-Time Home Buyer Grants is a crucial step in the application process. At ONE Street, we work with trusted lenders that we can refer you to if you do not want to take any chances. Simply schedule a consultation and we’ll be glad to help. These grants are not offered directly through the Federal Home Loan Bank (FHLB) but are accessible through participating member institutions, including banks, credit unions, and community development financial institutions (CDFIs). To kick start your search for FHLB First-Time Home Buyer Grants, consider reaching out to local lenders in Maryland. Many of these lenders have affiliations with the FHLB and can provide details about available grant programs.
2. Housing Counseling Agencies or Nonprofit Organizations: if you want some opinions about lenders, then going to an organization that specializes in homeownership assistance can offer valuable insights into various grant programs and steer you in the right direction such as SMTCCAC. The FHLB website is another useful resource. While they don’t directly provide grants, their website offers comprehensive information on homeownership assistance programs and potential resources available in your area.
3. Attending homebuyer education workshops or seminars organized by local government agencies or nonprofit organizations in Maryland can also be beneficial. These events typically cover topics like down payment assistance and grant opportunities for first-time homebuyers. Keep in mind that each state may offer different programs and resources for first-time homebuyers seeking grants from the FHLB. Conduct thorough research to explore specific options based on your location.
4. Determine Eligibility: Your chosen lender will assess if you meet FHLB grant requirements.
5. Complete the application: Provide details about your income, assets, and employment history. When applying for an FHLB grant, gather all necessary documents such as proof of income, identification documents, and any other supporting paperwork requested by the organization providing the grant. Submitting a complete and accurate application will increase your chances of success. Consider consulting a professional to help guide you through the application.
6. Attend a homebuyer education course in Maryland. Gain insights into the homebuying process, budgeting, and credit management.

Conclusion: Save on Your Down Payment in Maryland with an FHLB Grant

Struggling with a large down payment? An FHLB grant could be the solution. By collaborating with a participating lender and carefully navigating the application process, you can secure a home with minimal upfront costs and achieve your homeownership dreams.

While FHLB grants can help you, it’s crucial to consider other factors like credit score and debt-to-income ratio. Consulting a financial advisor or mortgage lender can help you make informed decisions tailored to your situation.

With the right knowledge and preparation, homeownership is within reach. Take advantage of an FHLB grant and embark on the path to homeownership with confidence.

No matter where you are on your homebuying journey, we’ll help you navigate the market.