Because of the great love God has for human beings, He grants us favor and blessings that we do not deserve. This is God's grace in action. Grace is God's unmerited favor toward mankind. In regard to the Christian life, the word sanctify refers to "making one holy" or "setting one apart for holiness." Therefore, sanctifying grace refers to the concept of God's grace infusing a person in order to make them holy.
The term sanctifying grace, also known as deifying grace or perfecting grace, originated within the Roman Catholic Church. Sanctifying grace is thought of as something that is imparted during baptism, one of the Catholic sacraments. The Roman Catholic Church believes that when a person receives sanctifying grace during baptism they become a part of Christ's body and are able to receive the other types of graces they will need in order to live a holy life. There is one other name for sanctifying grace according to the Catechism of the Catholic Church, and that is the "grace of justification." The Catholic Church believes that this sanctifying or justifying grace is what makes one justified in God's sight; it's what transforms a sinner into a child of God.
Methodist and Wesleyan churches teach about three different graces: prevenient grace, justifying grace, and sanctifying grace. Prevenient grace enables sinners to recognize their need for a Savior; justifying grace provides forgiveness; and sanctifying grace begins the purification journey that helps believers to become progressively more like Christ as they walk out their faith.
According to Protestant theology, Christians become justified by God and sanctified at the same time they are born again and filled with the Spirit (Romans 3:22–24; 15:16). First Corinthians 6:11 describes the transformed life of believers: "you were washed, you were sanctified, you were justified in the name of the Lord Jesus Christ and by the Spirit of our God" (see also 2 Thessalonians 2:13).
Sanctification happens at salvation and Jesus' sacrifice was good to last for all time: "And by that will we have been sanctified through the offering of the body of Jesus Christ once for all" (Hebrews 10:10). Protestants refer to this as positional sanctification, which is the same thing as justification. There is nothing we can do to earn this justification: "For by grace you have been saved through faith. And this is not your own doing; it is the gift of God" (Ephesians 2:8).
Another facet of sanctification is that it is progressive; believers continue being sanctified by the Holy Spirit throughout their lives (2 Corinthians 3:18; Philippians 2:12–13). Believers' salvation is sure, but they still retain the sin nature and still sin. As believers increase in their knowledge of God and His Word, their spiritual discipline and ability to obey God improves. They are positionally sanctified, and living for the Lord makes them progressively sanctified: "For by a single offering he has perfected for all time those who are being sanctified" (Hebrews 10:14). Total and "complete" sanctification will be achieved upon arrival in eternity when believers are completely freed from sin and with Christ in glory (Colossians 1:27; Romans 8:29–30; 1 John 3:2).
Though there are differences in beliefs on sanctification between Catholicism and Protestantism, they agree on a few big points: God gives His grace freely, salvation is received as a gift, and believers are to live holy lives.
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