Federal Housing Loan Bank Grant
Updated: Jan 4, 2023
Affordable Housing Program
By law, each FHLBank must establish an Affordable Housing Program (AHP), and must contribute 10 percent of its earnings to its AHP.
Under the Federal Home Loan Bank Act (FHLBank Act), the specified uses of AHP funds are to finance the purchase, construction, or rehabilitation of owner-occupied housing for low- or moderate-income households (with incomes at 80 percent or less of the area median income), and the purchase, construction, or rehabilitation of rental housing where at least 20 percent of the units are affordable for and occupied by very low-income households (with incomes at 50 percent or less of the area median income). The AHP leverages other types of financing, and supports affordable housing for special needs and homeless families, among other groups.
The FHLBanks are authorized to operate two programs:
Competitive Application Program - A financial institution member of a FHLBank submits an application for AHP funds to the FHLBank on behalf of a non-profit or for-profit sponsor and is evaluated in comparison to other applications under the FHLBank's scoring system. The FHLBank approves the applications in descending ranking order starting with the highest scoring application.
Homeownership Set-Aside Program - FHLBanks make grants available to their financial institution members, who provide the funds as down payment, closing cost, or counseling assistance to homebuyers, or as rehabilitation assistance to homeowners. Establishment of homeownership set-aside programs is elective for each FHLBank. FHFA's regulation limits the amount of funds that a FHLBank may allocate annually to its set-aside program.
What is an FHLB Grant?
FHLB Grants are available to qualifying homebuyers and can be used to reduce your principal or go towards your down payment and closing 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.
First Heritage Mortgage is proud to offer the Affordable Housing Program to provide eligible low-to-moderate income families and individuals with a grant of $7,500 to $10,000 towards their home purchase.
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, along with veterans and active-duty military 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 North Carolina could save $21,777 on their closing costs through the North Carolina Home Advantage Mortgage Program (NCHFA), a provider of FHLB Grants. They then need to put down just $2,096 and their monthly payment goes up by only $80.