How to get National Homebuyers Fund grants and loans

December 3, 2021 - 5 min read

NHF grants can help you buy a house sooner

Many would-be homeowners feel they can’t get a foot in the door because they lack cash for a down payment and closing costs.

Luckily, you’re not on your own when it comes to those big out-of-pocket expenses.

Thousands of down payment assistance programs nationwide can help first-time home buyers and repeat buyers alike.

The National Homebuyers Fund (NHF) is one such program. Since 2002, it’s given millions of dollars to help families achieve their homeownership dreams.

The best part: NHF grants and loans generally don’t have to be repaid. So if you qualify for assistance, it’s as good as free money.

Verify your home buying eligibility

In this article (Skip to...)

What is the National Homebuyers Fund?

The National Homebuyers Fund, Inc. (NHF) is a nonprofit public benefit corporation founded in 2002.

It offers closing cost and/or down payment assistance to qualified borrowers nationwide — including first-time homebuyers and repeat buyers.

According to its website, the NHF was created to “stimulate and expand homeownership opportunities and strengthen communities nationwide.” It targets people who seek affordable housing help, including first-time buyers.

Since its creation, the NHF has given more than $376 million in down payment assistance to eligible borrowers. What’s more, it has aided over 44,600 people or families in buying a home.

NHF home buyer assistance

The NHF can offer assistance up to 5% of your mortgage loan amount. So if you got a $250,000 mortgage, for example, the NHF might give you up to $12,500 as a grant or forgivable loan to help with your upfront costs.

California residents can also take advantage of other NHF programs, including financing for energy efficiency home upgrades, getting a Mortgage Credit Certificate (MCC), and additional down payment assistance.

How NHF grants work

The NHF is based in Sacramento, Calif., but people in all 50 states can pursue down payment and closing cost assistance from the NHF. It comes in two forms:*

  • A grant of up to 5% of the final loan amount: “Grants are free and do not have to be repaid,” notes Anna DeSimone, author of Live in a Home that Pays You Back
  • A second mortgage loan with 0% interest that is forgiven after three years: This second home loan is typically big enough to cover your down payment or closing costs

With a forgivable loan, you don’t have to pay any principal or interest — meaning, you don’t pay it back at all — if you abide by the program’s restrictions. Chiefly, you have to stay in the house the full three years it takes the loan to be forgiven.

“Forgivable loans help home buyers cover their upfront costs,” DeSimone says. “And then each year, for several years, a certain portion of the loan balance is forgiven, until it reaches zero.”

In the case of an NHF loan, the loan balance is completely forgiven after three years.

How to qualify for NHF down payment assistance

To qualify for a grant or loan from the National Homebuyers Fund, you have to meet a few basic requirements. Luckily, they aren’t too strict:*

  • You don’t have to be a first-time buyer to be eligible
  • The income limits are higher than expected, as the program is targeted to low-income as well as moderate-income individuals
  • The FICO score minimum and debt-to-income ratio maximums are relatively flexible: 640 and 45%, respectively
  • The assistance can be used for conventional mortgage loans as well as FHA, VA, and USDA loans
  • NHF assistance funds can be combined with other, non-NHF loan assistance programs

An important note: To apply for NHF down payment assistance, you need to work with a participating mortgage lender.

You can find one in your area by asking your real estate agent, or by contacting the NFH at its toll-free number: (866) 643-4968.

*An NHF representative confirmed this information but could not provide specific amounts/numbers.

Drawbacks to consider

There are some limitations with NFH assistance.

You have to remain in the home for at least three years. So if you plan on moving or refinancing soon after buying your home with the help of NFH funds, steer clear.

Also, currently, the assistance can be used for a home purchase but not a refinance. And only a select number of participating lenders offer NHF assistance. So you’ll have slimmer pickings when shopping around for the best interest rates.

Alternatives to the NHF for home buying grants

If you don’t qualify for an NHF grant — or, you’re looking for additional assistance to supplement one — there are plenty of other programs to help home buyers.

This article lists popular down payment assistance programs in every state.

Or, you can visit to locate aid resources in your area you may qualify for based on your credit and income.

Depending on the program offered, “usually, a minimum credit score of 640 is needed, and there are income limits that vary by state. And typically, these other programs offer assistance between 3% and 5% of the purchase price to eligible borrowers,” says Randall Yates, CEO of The Lenders Network.

Some homebuyers have also found deals through Fannie Mae’s HomePath program which connects buyers with foreclosed homes.

“Another place to look for homebuyer assistance is on the HUD website,” suggests Yates.

Check with local programs in your area

Ryan Leahy with Mortgage Network also recommends contacting the housing authority for the municipality where you’re buying. These agencies can help you find closing cost and down payment assistance programs that may not be widely known.

“Look closely at requirements that may have to be met, such as completing a first–time home buyer class,” advises Leahy.

Lastly, whether you pursue NHF funds or otherwise, “make sure you work with a loan officer that has experience working with grants and down payment assistance programs,” Leahy adds.

“Sometimes, these programs can make your mortgage loan a bit more challenging to coordinate and ensure all the funds are ready for closing,” he says.

Having a loan officer who’s already familiar with the process will make everything go more smoothly. However, there are often steps you need to take on your own — like completing a home buyer education course — so you should contact the NHF before getting started to make sure you understand all the steps required.

Low down payment loans can help, too

Down payment assistance programs through the NHF and local and state programs lower barriers for first-time homebuyers.

But you can also help yourself by finding low-down-payment loan options such as:

  • FHA loans: These require only 3.5% down if your FICO score is 580 or higher
  • USDA loans: You can buy with no down payment in qualifying rural areas and if you earn a moderate income; you’d need a 640 credit score with most lenders
  • VA loans: Veterans and active duty service members can buy with no down payment and no ongoing mortgage insurance with a VA loan
  • Some conventional loans: Fannie Mae and Freddie Mac offer some conventional loans with down payments as low as 3%

Private lenders across the nation offer these loan types.

What are today’s mortgage rates?

With rates at historic lows, it’s a great time to think about buying your first house.

Combined with down payment and closing cost assistance, the entire home buying process could be much more affordable than you thought.

Time to make a move? Let us find the right mortgage for you

Erik J. Martin
Authored By: Erik J. Martin
The Mortgage Reports contributor
Erik J. Martin has written on real estate, business, tech and other topics for Reader's Digest, AARP The Magazine, and The Chicago Tribune.