Givin the limited information in your question it is hard to answer; but I will try.  Even though you received a grant from the Federal Government to assist in the down payment requirement and closing costs you do still have to qualify for a residential mortgage loan.

Basic qualifications are as follows:

You have to be able to prove your income by submitting pay stubs as well as W2 forms for the prior 2 tax years. 

Your debt to income must fall within the guidelines; generally your total debt together with the projected mortgage payment can not exceed 45% of your gross income. 

Your FICO score must be higher than 620; there are other loan products available such as FHA that allows lower scores but these are approved on a case by case basis and you must provide an extenuating circumstance that caused the score to be low.

You must have at least 3 trade lines of credit on your credit report that have reported for a minimum of 12 months.  You can use alternative credit sources like phone bills and utility bills and rent to satisfy this requirement.

If you have a judgement or tax lien they must be paid.

If you have collections many times they will have to be paid.

If you are currently renting you will most of the time have to prove that you have paid rent on time for the last 12 months.  If you are renting from a private landlord then the only acceptable proof is cancelled checks or copies of money orders.  Cash payments are a big "no no".

The Mortgage Company is not stopping you in any way, they want to get you approved but you have to understand there are guidelines that must be followed and you may not meet the guidelines.  I would first suggest you ask your mortgage company if they are FHA approved; if not then go to an FHA approved lender because the FHA guidelines are a little more forgiving than the conventional Lenders.

If you do not qualify then ask the Lender what you can do to improve your ability to qualify for a mortgage in the future.  Then work on it and maybe in 6 months or a year you will be able to qualify.