How to pay for home improvements with government grants

If your home needs repairs to remove health or safety hazards, you might look into government-sponsored home improvement grants, also called home repair grants. Not everyone qualifies for these grants, and most have strict criteria that you must meet. However, if you do qualify, they are a great source of financing for your home improvement project.

What are grants for home improvements?

A grant is a form of financial aid that the recipient does not have to repay. Federal, state, and local governments may issue grants to those who qualify.

But there are limits to how you can use grant money for home repairs. You cannot use the funds to pay for cosmetic home improvements. Instead, you must use the money to repair health and safety hazards or make the home more handicap-accessible.

Since tax revenues fund government grants, they frequently have strict rules and auditing procedures. Many grants are competitive; even if you qualify for a grant, you may not necessarily receive it. You should apply for the grant as soon as possible.

Who is eligible for home improvement grants?

There are many home improvement grant programs, and eligibility requirements vary by program. For example, the Rural Development arm of the U.S. Department of Agriculture (USDA) offers home improvement grants to individuals who meet the following criteria:

• Own and occupy the home

• Unable to procure approval for affordable credit from other sources

• Meet income limitations

• Are at least 62 years old

The USDA awards a lifetime maximum of $7,500 to eligible homeowners.

The U.S. Department of Housing and Urban Development (HUD) also offers grants for low-income people through its HOME Investment Partnerships Program. In addition to handicap accessibility, HOME grants cover emergency repairs or improvements that protect against the weather. HUD may even offer a grant to pay for increased interest payments when a borrower takes out a home repair loan along with their mortgage.

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How to apply for home improvement grants

You can apply for home improvement grants for homeowners by contacting your local HUD office or visiting its website. HUD can let you know what grants are available in your area.

The National Residential Improvement Association (NRIA) can also help you find free home repair grants. You have to fill out a questionnaire to see what types of financial aid you qualify for.

When applying for grants for home improvements, be prepared to provide a variety of personal information and documentation. Many grant programs base eligibility on your household income, so have documentation regarding annual income ready to share.

Documentation requirements also vary by grant program. For instance, some grants for home renovations may require documentation regarding disabilities, while others require confirmation that you are a member of a recognized American Indian tribe. Other programs require proof of assets and employment.

Types of home improvement grants

• The Home Investment Partnerships Program – This HUD program provides grants to state and local governments that can be used to create affordable housing options for low-income households. State or local governments that receive HOME funds distribute the money to individuals in the form of grants, direct loans, loan guarantees or other types of financial support. Eligibility requirements include not having an income that’s more than 60 percent of the HUD-adjusted median family income for your area.

• Section 504 Home Repair Program – This program provides loans and grants to low-income and elderly homeowners, respectively, to help cover the cost of repairing or modernizing their single-family home. To qualify, you must be a homeowner and live in the home. In addition, you must be unable to qualify for affordable funding options elsewhere, and you must meet income requirements. For grants, you must be at least 62 years old.

• Native American Housing Improvement Program – This program offers up to $60,000 for repairs or renovations to help improve properties and bring them up to code. To qualify, you must be a member of a federally recognized American Indian tribe or an Alaska native. Additional requirements include living in an approved tribal service area and not having an income that exceeds 150 percent of the U.S. Department of Health and Human Services (DHHS) Poverty Guidelines. Your current housing must also be substandard under program guidelines, and you must be unable to obtain housing assistance elsewhere.

• Area Agency On Aging – This program, administered through the states, helps senior citizens improve their properties to make them more livable. Requirements and availability of funds vary by state and county. To find out more, search for your local program.

Home improvement grants for veterans

• VA Specially Adapted Housing Grant: Designed for veterans who have service-connected disabilities, the Specially Adapted Housing (SAH) grant provides support for building, remodeling or purchasing an adapted home. The maximum amount of funding available through this grant for 2023 is $109,986. To be eligible, you must have a service-related disability.

• Temporary Residence Adaptation Grant: These grants are available to veterans who are temporarily living in a family member’s home that needs modifications to meet their needs. To qualify for this funding, you must be eligible to receive the SAH grant or the Special Home Adaptation (SHA) grant. In addition, you must be temporarily living in a family member’s home.

What other forms of financial assistance are available to homeowners?

If you’re not eligible for home improvement grants for homeowners but still can’t afford to make the repairs on your own, consider these alternatives:

• Low-cost loans: Some organizations, such as the USDA and HUD, also offer affordable loans to lower-income homeowners. Keep in mind, unlike grants, you’ll need to repay the loan over time.

• Tax credits: You can use tax deductions in home improvement costs as a credit against taxes when you sell your home or if you work from your home and made repairs to your home office. However, they are not normally deductible as personal expenses.

• Cash-out refinance: A cash-out refinance lets you turn some of your home equity into cash that you can use for other purposes, including home improvements. In some cases, the interest on these loans is tax-deductible if used for a capital home improvement. Another perk is that cash-out refinance rates are usually lower than rates for other types of loans. Just keep in mind that you’ll be increasing your mortgage balance and potentially the length of your loan term.

• Weatherization Assistance Programs: Administered by the U.S. Department of Energy (DOE), these grants help low-income households increase their home’s energy efficiency. State and local governments distribute the funds. To apply, contact your state weatherization agency; an interactive map with contact information for each state agency is available on the DOE website. Households at or below 200 percent of the poverty income guidelines are eligible for weatherization services. Additionally, households receiving Supplemental Security Income or Aid to Families with Dependent Children may also qualify.

Bottom line

Home improvements can be expensive, but there are many grant programs available that can help you keep your home in good shape or renovate it to meet new safety needs. If you can’t find a grant program that applies to you, don’t lose hope. Other options, like cash-out refinancing or taking advantage of tax credits can help make home improvements affordable.