Blessed Are The Merciful

The Lord Jesus Christ taught that heaven will be inherited by people who are merciful. At the same time, we need to understand that Jesus' teaching in no way contradicts the reality of salvation by grace. So how do we reconcile these truths; namely that we're saved by grace, and yet there's a requirement that our life be a life of mercy for us to go to heaven? The answer to this question is vital because it will test whether or not our faith is genuine.