First-Time Home Buyer Grants: 2024 Guide

How first-time home buyers use grants to buy a house

First-time home buyer grants can make homeownership a reality by providing financial assistance for down payments and closing costs.

These home-buying grants, offered by state agencies and non-profits, typically don’t need to be repaid. While qualifying for these programs takes some effort, they are a legitimate and widely accepted way to fund your home purchase.

With the right guidance, you can unlock the door to homeownership sooner than you thought with first-time home buyer grants.

In this article (Skip to…)

• Home buying grants
• Requirements
• Finding grants
• First-time home buyer grants
• First-time home buyer programs
• FAQs

What are first-time home buyer grants?

First-time home buyer grants are financial assistance programs designed to help eligible buyers cover the upfront costs of purchasing a home, such as the down payment and closing costs.

Unlike loans, grants do not need to be repaid, making them an attractive option for first-time buyers who may struggle to save enough money for a down payment. Home buying grants can range from a few thousand dollars to a percentage of the home’s purchase price, depending on the program and the buyer’s financial situation.

Each grant program has its own eligibility requirements, which may include household income limits, credit score minimums, and geographic restrictions.

Types of financial assistance

In addition to grants, some first-time home buyer programs offer down payment assistance (DPA) that provides funds to cover a portion or all of the down payment or closing costs.

• Grant: Financial assistance that does not need to be repaid.
• Forgivable loan: A loan that does not need to be repaid if the borrower meets certain conditions, such as living in the home for a specific number of years.
• No-interest loan: A loan that does not accrue interest, requiring the borrower to repay only the principal amount.
• Low-interest loan: A loan with an interest rate below market rates, making it more affordable for borrowers.
• Deferred payment loan: A loan that postpones repayment until a later date, such as when the home is sold, refinanced, or the mortgage is paid off.
• Second mortgage: An additional loan taken out on top of the first mortgage, often used to cover down payment or closing costs.

Eligibility criteria for first-time home buyer grants

Eligibility requirements for home buying grants vary by program but often includes:

• Meeting the definition of a first-time home buyer (typically no home ownership in the past 3 years)
• Household income below certain limits, such as 80%, 100%, or 120% of the area median income (AMI)
• Purchasing a primary residence, not a second home or investment property
• Minimum credit score requirements, typically ranging from 620 to 680
• Homebuyer education course completion
• Purchasing a home below the maximum price limit
• Contributing some of your own funds, such as 1% down payment

Many grants to buy a house are designed for certain professions like teachers, first responders, healthcare workers, law enforcement officers, and firefighters. Check the specific criteria for grant programs you’re interested in.

Where to find first-time home buyer grants

To find grants for buying a house, start your search with:

• State housing finance agencies (HFAs): The National Council of State Housing Agencies lists all the state HFAs with links to each agency. Most states offer down payment and closing cost assistance through their HFAs.
• Local government agencies: Check with your city and county government housing departments for local first-time home buyer grants specific to your area.
• Non-profit housing organizations: Look for non-profit housing organizations in your area that offer assistance to first-time home buyers. They often have grant programs or can guide you to other local resources.
• Banks and mortgage lenders: Some banks and mortgage lenders offer proprietary grants for first-time home buyers. Ask your lender about any available grants or assistance programs.
• Employers and unions: Check with your employer or labor union for housing assistance programs for employees or members. Some offer first-time home buyer grants or other forms of financial assistance.
• HUD's Directory of Homebuying Programs: The U.S. Department of Housing and Urban Development (HUD) maintains a directory of homebuying programs by state to help you find local grant programs and other assistance options.

You can also ask your real estate agent or loan officer for recommendations on local first-time home buyer grant programs.

11 First-time home buyer grants to buy a house

First-time home buyer grants offer valuable financial assistance, helping new buyers cover costs like down payments and closing fees. These grants make buying a first home more affordable and accessible.

Let’s explore the different grants available, how to qualify for them, and how they can simplify your home purchase.

Fannie Mae Community Seconds Program

Offering up to 5% of the purchase price or appraised value (whichever is less) through a second mortgage, the Fannie Mae Community Seconds Program enables borrowers to finance their down payment and closing costs. This second mortgage can be funded by municipalities, nonprofits, employers, or other affordable housing programs and is combined with a Fannie Mae first mortgage to reduce the initial cash required at closing.

Freddie Mac Affordable Seconds Program

The Freddie Mac Affordable Seconds Program also provides up to 5% of the purchase price as a second mortgage to assist with financing down payment and closing costs. This program is designed to be used in conjunction with a Freddie Mac first mortgage program, making home ownership more accessible by lowering the upfront costs required from first-time home buyers.

Fannie Mae HomePath program

Buyers interested in purchasing foreclosure properties owned by Fannie Mae (REO or real-estate owned properties) can receive up to 3% of the purchase price towards closing costs through the HomePath program. HomePath supports applicants throughout the entire home buying process, helping them find and make an offer on a home, secure financing, and complete the closing. To qualify, buyers must complete a home buyer education course.

Bank of America’s home buying assistance

Bank of America provides two unique first-time home buyer grant programs:

1. America’s Home Grant offers up to $7,500 in lender credits for closing costs, such as title insurance, recording fees, appraisals, and discount points.
2. Down Payment Grant provides up to $10,000 (or 3% of the sales price, whichever is lower) to assist with the down payment in specified geographical areas.

Securing a home loan with Bank of America is necessary to take advantage of these grants. Be aware that the Down Payment Grant might have tax implications.

Wells Fargo Homebuyer Access Grants

Wells Fargo offers Homebuyer Access Grants of up to $10,000 to help with down payment and closing costs. Eligible buyers must meet income and home location requirements and complete a homebuyer education course. Wells Fargo offers these first-time home buyer grants in select markets across the United States, and they do not need to be repaid.

Citibank Lender Paid Assistance

Citibank’s Lender Paid Assistance program provides a credit of up to $7,500 for closing costs. To be eligible, you must meet household income requirements, purchase a home in a designated low- to moderate-income census tract, and obtain your main mortgage through Citibank. This first-time home buyer grant is available in select states.

Chase Homebuyer Grant

Chase offers a Homebuyer Grant up to $7,500 for those purchasing their primary residence in qualifying areas. The grant can be used to lower mortgage interest rates with discount points or applied to mortgage-related fees or down payments. Eligibility extends to applicants seeking Chase’s DreaMaker loan or those opting for conventional, FHA, or VA mortgages.

National Homebuyers Fund

The nonprofit National Homebuyers Fund sponsors down payment and closing cost grants that can total up to 5% of your home’s purchase price. You don’t have to be a first-time home buyer to qualify, but you need to use a participating lender and live in the home for five years as your primary residence. Household income limits apply.

Good Neighbor Next Door Program

The Good Neighbor Next Door (GNND) program provides a 50% discount on the list price of HUD-owned single-family homes in designated “revitalization areas.” Eligible borrowers include law enforcement officers, firefighters, emergency medical technicians, and prekindergarten through 12th-grade teachers. Participants must commit to living in the home for at least three years.

State and local grants to buy a house

Non-profit organizations and state Housing Finance Agencies (HFAs) offer first-time home buyer grants and down payment assistance (DPA). For example:

• Texas State Affordable Housing Corporation offers up to 5% of the home loan amount as an outright grant to cover the down payment for a new home.
• New York’s HomeFirst Down Payment Assistance Program provides up to $100,000 for buyers in the five boroughs.

Mortgage credit certificate (MCC) program

The mortgage credit certificate (MCC) program allows you to claim a dollar-for-dollar tax credit for some of the mortgage interest you pay—up to $2,000 each year. While it doesn’t directly provide grants, it makes home buying more affordable. Mortgage lenders may consider MCCs when determining how much you can borrow. Typically, first-time buyers with low or moderate incomes compared to the median income in their state or area qualify.

First-time home buyer loan programs

If you don’t qualify for grants to buy a house, there are other first-time home buyer programs that can make your home purchase more affordable.

Conventional loans

Conventional loans offer first-time buyers flexible down payment options, potentially lower mortgage insurance costs, and competitive mortgage rates. New buyers have several options.

Conventional 97

Conventional 97 loans require as little as 3% down, making them an attractive choice for homebuyers who may not qualify for grants but still seek a low down payment option. However, if your down payment is less than 20%, you’ll have to pay private mortgage insurance (PMI) until your loan-to-value ratio reaches 80%.

Fannie Mae HomeReady

Fannie Mae HomeReady is designed for low- to moderate-income borrowers. It offers a 3% down payment option and flexible credit requirements. HomeReady also allows for co-borrowers who don’t live in the home, which can help with qualifying income.

Freddie Mac Home Possible

Freddie Mac Home Possible is another low down payment option, requiring just 3% down. It’s geared toward low- to moderate-income borrowers and first-time homebuyers. Home Possible also offers flexible credit guidelines and allows for co-borrowers who don’t live in the home.

FHA loans

The Federal Housing Administration backs FHA loans, which are well suited for first-time home buyers because they offer lower credit score minimums—between 500 to 580—and down payment requirements as low as 3.5% of the home sales price. However, you must pay mortgage insurance premiums (MIP) until the loan is paid or you refinance into another loan type.

VA loans

VA loans, backed by the Department of Veterans Affairs, offer significant benefits for veterans and active military members. There is no maximum loan amount, no requirement for a down payment, and no ongoing mortgage insurance. This makes them an exceptional choice for eligible individuals seeking flexibility and financial support.

USDA loans

The U.S. Department of Agriculture guarantees USDA loans for home buyers with moderate to low incomes looking to buy a house in designated rural areas. They offer competitive mortgage interest rates and require no down payment.

How to apply for first-time home buyer grants

Applying for first-time home buyer grants can make purchasing your first home more affordable. This step-by-step guide will help you prepare for the grant process ahead.

1. Check your eligibility for specific grant programs

Begin by researching various homeownership programs offered by local or state housing authorities. These programs often include grants and low-interest loans tailored for first-time buyers. Make sure you meet the eligibility requirements, which typically cover income limits, credit scores, and property locations.

2. Gather required documentation

Prepare the necessary documents to prove your financial readiness. This includes proof of income through pay stubs or tax returns, bank statements showing your savings, and a fixed rate mortgage pre-approval to demonstrate your ability to manage consistent mortgage payments.

3. Complete a homebuyer education course

Most programs require a homebuyer education course to help you understand the responsibilities of homeownership. Complete this course with an approved provider and obtain a certificate to submit with your application.

4. Submit your application and supporting documents

Complete all application forms accurately and attach your financial documents and homebuyer education certificate. Make sure to submit your application by the grant program’s deadline if you want to be considered for the current funding cycle.

5. Await approval and allocation of funds

Once your application is submitted, it will undergo a review process. If approved, the grant funds are usually sent directly to the closing agent, who will apply them toward your down payment and closing costs.

Additional tips

Maintain a well-organized file of all documents and communications related to your grant application. This can help streamline the process and ensure you have quick access to any needed information. If you do not receive feedback within the expected timeframe, follow up with the administrators to demonstrate your interest in the grant.

FAQ: First-time home buyer grants

Qualifying for grants to buy a house

Discovering the right first-time home buyer grants to buy a house can be a game-changer for prospective homeowners.

These home buyer grants are designed to make the dream of owning a house more attainable. Your best resources are your local housing finance agency, your real estate agent, and your loan officer.

Any of these professionals can help you understand your loan options and suggest local first-time home buyer grants and initiatives.