Last Updated: January 2026

Imagine buying your first home with free money that you never have to pay back. That's exactly what first-time homebuyer grants offer. Unlike home loans, grants are gifts, down payment assistance that doesn't require repayment, helping first-time buyers overcome one of the biggest barriers to home ownership: the down payment.

Every year, billions of dollars in down payment assistance go unused because borrowers don't know these programs exist. Programs for first-time homebuyers from the Department of Housing and other agencies are designed to help you purchase a home. In this comprehensive guide, we'll show you how to find and qualify for first-time home buyer grants in your area, including federal grants, state grants, local affordable housing programs, and nonprofit mortgage assistance that can help you with home buying.

What Are First Time Home Buyer Grants?

First time home buyer grants are financial gifts from government agencies, nonprofits, and other organizations that help cover your down payment and closing costs. The key difference between grants and loans is that grants do not need to be repaid, they're essentially free money toward your home purchase.

Grants vs. Other Down Payment Assistance

Understanding the difference between grants and other assistance is crucial:

• Grants: True gifts that never need repayment. You receive the money and owe nothing back.
• Forgivable loans: Second mortgages that are forgiven after living in the home for a set period (usually 5-15 years). If you sell or move early, you repay a portion.
• Deferred loans: Zero-interest loans with no monthly payments, repaid when you sell, refinance, or pay off your mortgage.
• Low-interest loans: Second mortgages with below-market rates requiring monthly payments.

This guide focuses primarily on true grants and forgivable loans, which together represent the most valuable forms of down payment assistance for first time home buyers.

Types of First Time Home Buyer Grants

Down payment grants come from multiple sources. Knowing where to look increases your chances of finding assistance.

Federal Grant Programs

While the federal government doesn't offer direct grants to individual homebuyers, it funds programs that state and local governments use to provide grants through participating lenders and first mortgage programs:

• HOME Investment Partnerships Program: HUD provides funds to states and localities for housing assistance including down payment help
• Community Development Block Grants (CDBG): Federal funds used by local governments for housing programs
• Homeowner Assistance Fund: Created during COVID-19 to help homeowners, some states use funds for down payment assistance

State Housing Finance Agency Grants

Every state has a housing finance agency (HFA) that administers down payment assistance programs and mortgage loan options. Many offer grants or forgivable loans to help first-time buyers with their first mortgage:

Contact your state housing finance agency for current program details and availability

Local Government Grants

City and county governments often offer their own down payment assistance grants, sometimes more generous than state programs:

• City housing departments: Many cities offer $10,000-$50,000 in grants
• County programs: County-level assistance varies widely
• Housing authorities: Local housing authorities may offer homeownership programs
• Community development agencies: Target specific neighborhoods for revitalization

Nonprofit Organization Grants

Numerous nonprofit organizations provide grants for first time buyers:

• Habitat for Humanity: Builds and sells affordable homes with favorable terms
• NeighborWorks America: Network of over 200 organizations providing homebuyer assistance
• NACA (Neighborhood Assistance Corporation of America): Offers no-down-payment mortgages with no fees
• Housing counseling agencies: HUD-approved agencies often connect buyers with grants
• Community action agencies: Local nonprofits serving low-income families

Employer Homebuyer Assistance

Some employers offer employer-assisted housing (EAH) benefits:

• Direct down payment grants or forgivable loans
• Closing cost assistance
• Matched savings programs
• Access to preferred lenders with special rates

Large employers in healthcare, education, technology, and government often have these programs. Check with your HR department.

How Much Can You Get in Grants?

Grant amounts vary significantly depending on the program, your location, and your financial situation. Here's what to expect:

Typical Grant Amounts

• Small grants: $2,500-$5,000 (common from local nonprofits)
• Medium grants: $5,000-$15,000 (typical state programs)
• Large grants: $15,000-$50,000 (major city programs, targeted neighborhoods)
• Percentage-based: 3-5% of purchase price (common structure)

Maximum Combined Assistance

By combining multiple programs, some buyers receive $20,000-$50,000 or more in total assistance. For example:

• State program: $10,000 forgivable loan
• City grant: $7,500 grant
• Employer assistance: $5,000 match
• Total: $22,500 in assistance

Qualifying for First Time Home Buyer Grants

Most home grant and down payment grant programs have similar qualification requirements. Understanding these helps prospective homebuyers prepare and identify which payment or closing costs programs they're eligible for. The Department of Housing and Urban Development (HUD) sets guidelines that many programs follow.

First Time Buyer Status

Most programs require you to be a first time home buyer, defined as someone who hasn't owned a principal residence in the past three years. This includes:

• People who have never owned a home
• People who owned a home more than 3 years ago
• Single parents who only owned with a former spouse while married
• Displaced homemakers

Some programs waive the first time buyer requirement for purchases in targeted areas or for certain professions.

Income Requirements

Most grants have income limits based on Area Median Income (AMI):

• 80% AMI: Common threshold for many programs (considered "low income")
• 100% AMI: Some programs allow median income earners
• 120% AMI: More generous programs for moderate income buyers

Income limits vary dramatically by location. In San Francisco, 80% AMI for a family of four is over $137,000. In rural areas, it might be under $50,000.

Credit Score Requirements

Grant programs typically require minimum credit scores:

• 620: Common minimum for most programs
• 640: Required by some state programs
• 680: Some programs require higher scores

Note: Your credit score also affects your mortgage eligibility, so meeting grant requirements doesn't guarantee mortgage approval.

Homebuyer Education

Almost all grant programs require completion of homebuyer education classes from an approved housing counseling agency. Assistance for first-time homebuyers through eligible homebuyer programs typically requires these homebuying courses. Options include:

• In-person classes (4-8 hours)
• Online courses (eHome America, Framework, HomeView)
• One-on-one counseling sessions

Keep your certificate of completion, you'll need it for your application.

Property Requirements

Grants typically have rules about the property:

• Primary residence: Must live in the home (no investment properties)
• Purchase price limits: Maximum prices vary by county
• Property type: Usually single-family, condo, townhome, or 2-4 unit
• Property condition: Some programs have minimum standards
• Location requirements: Some target specific areas

Occupancy and Residency Requirements

Grant programs often require you to:

• Live in the home as your primary residence
• Stay in the home for a minimum period (often 5-15 years for forgivable loans)
• Be a U.S. citizen, permanent resident, or qualified alien
• Buy in the state/city offering the grant

How to Find Grants in Your Area

Finding available grants requires research across multiple sources. Qualified first-time homebuyers can access numerous payment grant programs throughout the home buying process. Here's a systematic approach to help you buy a home:

Step 1: Check Your State Housing Finance Agency

Start with your state's HFA website. Every state has one, and they're the primary source of down payment assistance. Search "[Your State] housing finance agency" or visit the National Council of State Housing Agencies (NCSHA) website.

Step 2: Contact City and County Housing Departments

Visit your city and county government websites and look for:

• Housing department or housing authority
• Community development department
• Homeownership programs
• Down payment assistance programs

Step 3: Use Down Payment Resource

Down Payment Resource (downpaymentresource.com) is a database of over 2,000 assistance programs. Enter your location and details to find programs you may qualify for.

Step 4: Find HUD-Approved Housing Counselors

HUD-approved housing counseling agencies know local programs and can help you navigate options. Visit HUD's website to find counselors in your area, many offer free services.

Step 5: Ask Your Lender

Mortgage lenders familiar with first time buyer programs can identify assistance options and tell you which programs they work with. Not all lenders participate in all programs, so this matters.

Step 6: Check with Your Employer

Ask your HR department about employer-assisted housing benefits. Many employees don't realize their company offers this.

Applying for First Time Home Buyer Grants

The application process varies by program, but here's what to expect:

Documents You'll Need

• Identification: Government-issued ID, Social Security card
• Income documentation: Pay stubs (recent 30 days), W-2s (2 years), tax returns (2 years)
• Asset statements: Bank statements, retirement accounts, investment accounts
• Employment verification: Letter from employer or HR contact
• Homebuyer education certificate: Proof of course completion
• Purchase agreement: Once you have an accepted offer

Application Timeline

1. Research programs: 2-4 weeks before house hunting
2. Complete homebuyer education: 1-8 hours (can be done anytime)
3. Get pre-approved for mortgage: 1-2 weeks
4. Apply for DPA program: Simultaneously with mortgage or upon offer acceptance
5. Receive approval: 2-6 weeks depending on program
6. Close on home: Grant funds disbursed at closing

Tips for Successful Applications

• Apply early: Some programs have limited funding and first-come, first-served allocation
• Be thorough: Incomplete applications cause delays
• Stay organized: Keep all documents in one place
• Respond quickly: When lenders or program administrators request information
• Work with experienced professionals: Lenders and agents familiar with DPA programs

National First Time Home Buyer Grant Programs

Several programs are available nationwide to help first time buyers:

Bank of America America's Home Grant

Bank of America offers grants in designated areas:

• Up to $7,500 for down payment and closing costs
• No repayment required
• Available in certain low-to-moderate income areas
• Must use Bank of America as your lender

Chase Homebuyer Grant

JPMorgan Chase offers grants in eligible areas:

• Up to $5,000 toward closing costs
• Available in majority-minority census tracts
• No income limits for grant (income limits for additional assistance)
• Must use Chase as your lender

Chenoa Fund

A nationwide down payment assistance program:

• 3.5% or 5% of purchase price
• Forgivable after 36 months of on-time payments
• Works with FHA and conventional loans
• No first-time buyer requirement

HomePath Ready Buyer Program

Fannie Mae's program for purchasing foreclosed properties:

• Up to 3% toward closing costs
• For Fannie Mae-owned properties only (HomePath homes)
• Requires homebuyer education
• Available to first time buyers and repeat buyers

Grants for Specific Groups

Certain groups may qualify for additional or specialized grants:

Grants for Teachers

• Good Neighbor Next Door: 50% off homes in revitalization areas
• Teacher Next Door: Various assistance programs
• State-specific programs: Many states offer teacher homebuyer assistance

Grants for Healthcare Workers

• Homes for Heroes: Savings on purchases and sales
• Hospital employer programs: Many healthcare systems offer housing assistance
• Physician loans: While not grants, these offer favorable terms

Grants for First Responders

• Good Neighbor Next Door: Available to law enforcement, firefighters, EMTs
• Homes for Heroes: Discounts on home purchases
• State and local programs: Many localities offer first responder assistance

Grants for Veterans

While VA loans don't require down payments, veterans can also access:

• State veteran homebuyer programs
• Veteran-specific grants from nonprofits
• Homes for Heroes savings

Grants for Single Parents

Single parents may qualify for:

• Programs with more favorable income calculations
• Habitat for Humanity prioritization
• Nonprofit assistance programs

Grants for Native Americans

• HUD Section 184 loans: For Native Americans and Alaska Natives
• Tribal housing programs: Tribe-specific assistance
• Native American homebuyer initiatives

Forgivable Loans: Almost as Good as Grants

Forgivable loans function almost like grants, they don't require repayment if you meet program requirements (usually staying in the home for a specified period).

How Forgivable Loans Work

1. You receive a second mortgage for your down payment
2. No monthly payments are required
3. A portion is forgiven each year (typically over 5-15 years)
4. After the full period, the entire loan is forgiven
5. If you sell or refinance early, you repay the unforgiven balance

Forgiveness Schedules

Linear forgiveness: Equal amounts forgiven each year

• $10,000 loan with 5-year forgiveness: $2,000 forgiven annually
• Sell after 3 years: Owe $4,000

Cliff forgiveness: Full amount forgiven after set period

• $10,000 loan with 10-year cliff: $0 forgiven until year 10
• Stay 10 years: Owe nothing
• Sell after 9 years: Owe $10,000

Popular Forgivable Loan Programs

• Illinois Housing (IHDA) Access Forgivable: Up to $10,000, forgiven over 10 years
• Maryland Mortgage Program DPA: Up to $5,000, various forgiveness terms
• Texas TDHCA: Up to 5% of loan, forgivable options available
• Colorado CHFA: Forgivable options with various terms

Combining Grants with Loan Programs

The most powerful strategy is stacking grants with favorable homebuyer loan programs, home repair loan options, and mortgage products available in 2025:

Grant + FHA Loan

• FHA requires 3.5% down payment
• State grant covers down payment
• City grant covers closing costs
• Result: Buy with minimal out-of-pocket costs

Grant + Conventional 97

• Conventional 97 requires 3% down
• Grant covers down payment and some closing costs
• PMI is removable (unlike FHA MIP)
• Result: Lower long-term costs than FHA

Grant + VA Loan

• VA requires 0% down
• Grant covers closing costs
• No mortgage insurance
• Result: Extremely low out-of-pocket costs for veterans

First Time Home Buyer Grants FAQs

Are first time home buyer grants really free?

True grants are completely free and never need to be repaid. However, forgivable loans (often grouped with grants) require you to stay in the home for a set period. If you sell or refinance before the forgiveness period ends, you may need to repay some or all of the assistance. Always read program terms carefully to understand your obligations.

How do I find first time home buyer grants near me?

Start with your state housing finance agency website, every state has programs. Then check your city and county housing departments. Use Down Payment Resource (downpaymentresource.com) to search by location. Contact HUD-approved housing counselors in your area for personalized guidance. Finally, ask your mortgage lender about programs they participate in.

What is the income limit for first time home buyer grants?

Income limits vary by program and location. Most programs cap income at 80-120% of Area Median Income (AMI). In high-cost areas, you might qualify with income over $100,000. In lower-cost areas, limits may be $50,000-$70,000. Check specific programs in your area for exact limits, they're updated annually.

Can I get a grant if I have student loans?

Yes, having student loans doesn't disqualify you from grants. However, your student loan payments affect your debt-to-income ratio, which impacts mortgage approval. Grant programs look at income, credit score, and first-time buyer status, not your existing debt. Some programs even count income-driven student loan payments at a lower rate when calculating DTI.

Do grants affect my taxes?

Generally, down payment grants are not considered taxable income. The IRS treats most housing assistance as a purchase price reduction rather than income. However, tax implications can vary by program type and your specific situation. Consult a tax professional if you have questions about your particular circumstances.

Can I combine multiple grants?

Yes, many buyers combine grants from different sources. You might stack a state grant with a city grant and employer assistance. The key is ensuring programs are compatible, some have restrictions on combining with other assistance. Work with a lender experienced in DPA programs to maximize your benefits.

What happens to my grant if I sell my home?

True grants don't require repayment when you sell. Forgivable loans require repayment of any unforgiven balance if you sell before the forgiveness period ends. Deferred loans become due when you sell. Each program has specific terms, review your grant agreement to understand your obligations before selling.

How long does it take to get approved for a grant?

Grant approval timelines vary from 2-6 weeks depending on the program. Apply as early as possible, ideally before you have an accepted offer. Complete homebuyer education early since it's required for most programs. Some programs have limited funding and operate first-come, first-served, making early application even more important.

Summary: Getting Free Money for Your Home

First time home buyer grants can provide thousands of dollars toward your down payment and closing costs, money you never have to repay. Here's what you need to know:

• Grants are real: Billions in assistance goes unused annually because buyers don't know about it
• Multiple sources: State agencies, cities, counties, nonprofits, and employers all offer grants
• Typical amounts: $5,000-$50,000 depending on program and location
• Requirements: Usually first time buyer status, income limits, homebuyer education, and credit score minimums
• Stack benefits: Combine grants with FHA, VA, or conventional loans for maximum assistance
• Act early: Some programs have limited funding

Don't let the down payment stop you from becoming a homeowner. Research available programs, complete homebuyer education, and work with professionals experienced in down payment assistance programs.