Closing Cost Assistance (CCA) | Grants & Programs 2025

How to get help with your closing costs? 

Closing cost assistance can be a game-changer for home buyers who are caught off guard by the extra expenses that come with purchasing a home. 

Let's say you've diligently saved $20,000 for a down payment, only to discover that you also need to fork over an additional $7,500 for closing costs. This could reduce your initial down payment amount by a significant margin. 

However, if you meet the eligibility criteria, closing cost assistance could offer you thousands of dollars in relief, allowing you to hold on to more of your hard-earned savings.

In this article (Skip to…)

• Forms of assistance
• Closing costs assistance grants
• Types of programs
• Requirements
• Approval tips
• Pros and cons
• Applying
• Closing cost reduction
• FAQ

What is closing cost assistance?

Closing cost assistance is financial help provided to home buyers to cover the expenses associated with closing a real estate transaction. These funds can come in the form of a closing cost assistance (CCA) grant, which does not need to be repaid, or a special assistance loan, which may have favorable terms such as no interest or deferred payments.

Buyers are typically responsible for paying various closing costs when purchasing a home, which can include fees such as appraisal, attorney, title insurance, loan origination, and other expenses related to the home purchase.

Closing cost assistance programs are intended to help buyers reduce their financial burden by providing funds or grants to offset some or all of these closing costs. The specifics and availability of such programs may differ depending on the location and program.

How does closing cost assistance work?

Generally, closing cost assistance is not a standalone program. It’s included as part of a down payment assistance (DPA) program. DPAs typically offer money that can be put toward your down payment or closing costs—whatever will help most with your home purchase. 

Regardless, the funds can come to you in one of several ways. Each source offers different types of assistance, each with unique benefits and conditions that can affect your home buying process.

Closing cost assistance grants

Closing cost grants are gifts to homeowners that do not need to be repaid, making them possibly the best type of financial assistance available. Nonprofits and government programs frequently provide grants for closing costs to first-time buyers or low-income individuals, helping them cover upfront costs without the need for repayment.

Loan-based assistance options

Loan-based options are another common form of closing cost assistance, providing first-time home buyers with various ways to manage their upfront expenses.

Forgivable loans

A forgivable loan is a type of loan that does not have to be repaid if the homeowner remains in the house for a set period, effectively turning it into a grant. This option encourages homeowners to maintain their property as their primary residence for the duration of the term. It supports community stability and homeowner commitment.

No- or low-interest loans

Offered often as a second mortgage loan, this type of loan aids in covering closing costs and is repaid alongside the primary, or first mortgage. It's designed with no or low interest to lighten the financial burden on the home buyer. State or local housing finance agencies usually provide these loans. They're an attractive option for reducing the immediate out-of-pocket expenses involved in purchasing a home.

Deferred-payment loans

Some closing cost assistance programs offer deferred-payment loans, which do not require monthly payments. Instead, the loan is repaid when the home is sold, refinanced, or when the first mortgage is fully paid off. 

This can provide immediate relief to homebuyers and allow them to focus on their mortgage payments without the added burden of additional loan repayments.

Matched savings programs

Matched savings programs encourage saving for closing costs by offering to match the funds you deposit, typically through a deferred-payment plan. While you're expected to repay your savings, the matched amount often comes as a grant that provides extra support without the need for repayment.

Lender credits

Participating lenders might provide lender credits to help with closing costs in exchange for a slightly higher interest rate on your home loan. This arrangement can minimize the amount needed at closing but results in a higher overall cost due to the increased interest over the life of the loan.

Seller contributions

Negotiations with the seller can lead to contributions towards the buyer's closing costs, decreasing the cash required at closing. This agreement is particularly beneficial in competitive markets where sellers are willing to offer more to close the deal.

Where to find closing cost assistance grants

Contacting your state's approved lender or Housing Finance Authority (HFA) is a smart first step for buyers seeking closing cost grants. These government agencies typically offer mortgage programs and grants to help with closing costs. At the very least, they’ll provide you with a list of resources to help you with your down payment and closing costs. 

To find out more about programs for which you might be eligible, you can also read through the following guides:

• Down payment assistance programs by state
• First time home buyer programs by state

Keep in mind that qualifying requirements for closing cost and down payment assistance grants vary by program. Income caps and maximum loan amounts are common. 

But you don’t always have to be a first-time home buyer to get financial aid. Many programs are available to repeat buyers or former homeowners who haven’t owned property in the last three years. 

Types of closing cost assistance programs

Closing costs often catch first-time home buyers by surprise, but various types of closing cost assistance are available to ease that financial burden. 

Whether it's through grants or loans, local, state, and federal agencies offer programs specifically designed to help those going through the home buying process. Don't assume you're ineligible; many of these programs are easier to qualify for than you might think.

Each type of closing cost assistance has its own set of guidelines and requirements. The funds can typically be used for both down payments and closing costs, giving you more flexibility in how you allocate your savings. 

Federal assistance programs

For qualified buyers, federal programs like the FHA, VA, and USDA offer loans that may include closing cost assistance. Additionally, programs offered by the U.S. Department of Housing and Urban Development (HUD) can help with closing costs, especially for first-time home buyers and those with low-to-moderate incomes.

State and local assistance programs

Numerous state and local assistance programs assist residents with closing costs. These programs are typically designed to encourage homeownership in the community. Grants or low-interest loans, some of which might be forgiven, are two ways they can be provided.

Nonprofit and private assistance programs

Private lenders and nonprofit organizations also provide closing cost assistance grants and programs. These can have a wide range of eligibility requirements and types of aid offered. Some might concentrate on helping particular communities, like veterans or single parents.

Seller concessions or lender credits

Lender-specific programs can also offer help with closing costs. These might include lender credits in exchange for a higher mortgage interest rate. Additionally, seller concessions can further reduce your burden by having the seller pay a portion of the buyer’s closing costs directly.

How to qualify for closing cost assistance

Once you have found closing cost assistance programs in your area, your next step is to complete an application. When it comes to getting help with closing costs, knowing the basic requirements and eligibility criteria can be very important. 

Because there are so many closing cost grant programs available through state and local housing commissions, eligibility requirements can vary. But there are some general guidelines to remember.

Income limits

You typically can’t make more than your area’s median income (AMI). Your household income limit is based on your household size. This limit ensures that assistance is provided to those who need it most, based on local economic standards.

Minimum credit score requirements

A minimum FICO score of 620 to 640 is common. Having a good credit score demonstrates to lenders and assistance programs that you have a history of managing credit responsibly and the capability to repay loans. A higher credit score might also unlock better interest rates or more favorable terms.

Property requirements

Usually, the property must be a single-family home used as your primary residence. There may also be purchase price limits. This ensures the program benefits individuals and families seeking a home for personal occupancy, rather than investors. Some programs may also support the purchase of condominiums or townhomes under specific conditions.

Loan type

Some organizations offer specialized mortgage loan programs to be used alongside closing cost assistance and down payment grants. Compatibility varies, with some programs accommodating a wide range of loan types, from conventional loans to government-backed FHA, VA, and USDA loans. This flexibility allows applicants to choose the best loan product for their situation.

Homebuyer status

Some programs are offered to both repeat and first-time purchasers; others are for first-time home buyers only. Most programs define first-time buyers as anyone who hasn’t owned a home in the past three years. This distinction helps target assistance for those entering the housing market for the first time.

Homebuyer education

Borrowers are usually required to complete a homeownership program, often just a few hours long and available online. These educational sessions equip buyers with the necessary knowledge about buying and owning a home, from managing finances to understanding mortgage options.

U.S. residency

Applicants must usually be citizens or authorized residents of the United States. This requirement ensures that help with closing costs is offered to those with legal status in the country.

Documentation

To qualify for closing cost assistance, you'll need to provide various documents. This typically includes: 

• Tax returns 
• W-2s, pay stubs, or other proof of income 
• Bank statements
• Proof of U.S. residency 

If you're applying for a program that requires you to be a first-time home buyer, you may also need to provide proof that you haven't owned a home in the past three years.

By meeting these criteria, prospective home buyers can navigate the process of qualifying for closing cost assistance more effectively, making the dream of homeownership more attainable and sustainable.

Tips to increase your chances of qualifying for closing cost grants

Securing closing cost assistance can make a significant difference in your home buying journey, especially if you're a first-time home buyer looking for help with closing costs. 

Here are some strategic tips to improve your eligibility for these valuable grants:

Improve your credit score

A higher credit score not only improves your chances of qualifying for a mortgage but also for closing cost assistance grants. Start by checking your credit report for any errors and working on paying down outstanding debts. 

Consistently making on-time payments can gradually improve your score. This is crucial because many grants for closing costs have minimum credit score requirements.

Get pre-approved for a mortgage

Obtaining mortgage pre-approval demonstrates to grant providers that you are a serious and qualified buyer. It shows that a lender has already evaluated your financial situation and is willing to lend you a certain amount. This step can significantly strengthen your application for closing cost grants.

Save for a down payment

While saving for a down payment might seem counterintuitive when seeking assistance, having some funds saved can show financial responsibility and commitment. Some closing cost assistance programs might require you to contribute a certain percentage towards the down payment or closing costs, so having savings can increase your chances of qualifying.

Explore local and state programs

Many states and local governments offer grants to help with closing costs, specifically designed for first-time home buyers or low-to-moderate income families. Research and apply for these programs, as they may have more favorable terms or additional benefits compared to national programs.

Consult with a housing counselor

A HUD-approved housing counselor can provide valuable advice on improving your eligibility for closing cost assistance. They can help you understand the requirements of different programs and guide you through the application process, increasing your chances of success.

Keep your financial situation stable

Avoid making any significant financial changes or large purchases before applying for closing cost assistance. Lenders and assistance programs will review your financial stability, so maintaining a steady job and avoiding new debts can enhance your application.

Pros and cons of closing cost assistance

While closing cost assistance programs can be of great help to many home buyers, they come with their own set of advantages and disadvantages.

Benefits of closing cost assistance

One of the primary benefits of closing cost assistance is the financial relief it provides. By reducing the upfront costs of buying a home, these programs can make homeownership more accessible, especially for first-time or low-income buyers.

Additionally, they can enable buyers to maintain more savings for emergencies, home repairs, or to invest in home improvements.

Drawbacks of closing cost assistance

On the downside, many assistance programs come with conditions. For instance, some programs may require you to live in the home for a certain period of time or offer the assistance as a loan that gets repaid when the home is sold.

Also, some forms of assistance, like seller concessions or lender credits, might result in a higher purchase price or interest rate.

Before applying for closing cost assistance, it's important to thoroughly understand the terms of the program and consider whether it's the right fit for your financial situation.

What are closing costs?

The term "closing costs" refers to a broad range of fees associated with home purchases. They are typically paid when the transaction is closed, hence the name. 

The average cost of closing typically ranges from 2% to 5% of the home's purchase price. Fees for the mortgage loan, title searches, insurance, surveys, and other expenses can be included in these costs.

Types of closing costs

There are several typical closing costs that you should be aware of as a homebuyer.

• Loan origination fee: Your lender charges this fee to process the new loan. It often ranges from 0.5% to 1% of the total loan amount.
• Appraisal fee: An appraisal is required to determine the fair market value of the home. The fee for this service typically ranges from $300 to $500.
• Title search and insurance fee: Title search and insurance protect you and your lender from any future property ownership claims. Fees for these services can vary widely but typically run between $500 and $1000.
• Inspection fees: These fees cover the cost of home inspections, which can identify potential issues with the property.
• Escrow deposit: You may be required to put down two months' worth of property tax and mortgage insurance payments into an escrow account.
• Recording fees: Your neighborhood city or county levies these fees for recording new land records. 

How to apply for closing cost assistance

Applying for closing cost assistance does not have to be intimidating. With the right approach, you can increase your chances of approval. This section will guide you through the steps, timing, and common pitfalls to avoid when seeking help with your closing costs.

Step-by-step application process

1. Research: Start by researching first-time home buyer closing cost assistance programs available in your area. This includes federal, state, local, and nonprofit programs. Determine if you meet the qualifying requirements, which often include income limits and the property being owner-occupied.
2. Gather your documents: Prepare all necessary documentation, such as proof of income, tax returns, bank statements, and other relevant information.
3. Submit an application: Apply for the assistance program either online or in person, depending on the program's requirements. Fill out all required forms accurately, and attach your documents.
4. Follow up: After submitting your application, be sure to follow up. The approval process can take some time, but regular check-ins show your continued interest.

When to apply fo closing cost assistance

The best time to apply for help with closing costs is as soon as you start thinking about buying a home. It's best to start early because the process can take a while.

After you apply, you'll have to wait for approval, which could take anywhere from a few weeks to a few months. If you're approved, you'll find out how much help you've been given and if there are any rules or requirements that come with it.

Here are some key points to remember:

• Start early: Begin researching and applying for assistance programs as soon as you decide to buy a home. Many programs have limited funds and operate on a first-come, first-served basis.
• Consider program deadlines: Some closing cost assistance programs have specific application periods or deadlines. Make sure you're aware of these and apply accordingly.
• Coordinate with your mortgage application: If you're wondering how to get money for closing costs, remember that many assistance programs need to be coordinated with your primary mortgage application. Apply for assistance around the same time you start the mortgage process.

Common application mistakes to avoid

To improve your chances of qualifying for closing cost assistance, avoid these common pitfalls:

1. Incomplete applications: Ensure all required fields are filled and all necessary documents are attached.
2. Missing deadlines: Keep track of all important dates and submit applications well before the deadline.
3. Applying for ineligible programs: Carefully review eligibility criteria before applying. Don't waste time on programs you don't qualify for.
4. Neglecting to ask questions: If you're unsure about something, ask. Program administrators are there to help.
5. Forgetting about assistance options: What if I can't afford closing costs? Don't forget that assistance programs exist. Many buyers overlook these valuable resources.
6. Not comparing options: Different programs offer various benefits. Compare multiple options to find the best fit for your situation.
7. Providing inconsistent information: Ensure the information on your assistance application matches your mortgage application to avoid red flags.

By following these guidelines and being thorough in your approach, you'll be well-positioned to navigate the closing cost assistance application process successfully. Remember, these programs are designed to help make homeownership more accessible, so don't hesitate to take advantage of them if you qualify.

Other ways to reduce closing costs

Closing cost assistance doesn’t have to come exclusively from a housing finance agency or local program. There are other ways to come up with the cash, too.

1. Ask the seller to pay closing costs

"It’s common for the home seller to pay for some or all of the buyer’s closing costs. This is most commonly seen by working the request into the buying offer," says Reggie Graham, branch manager for Thrive Mortgage.

"At least request that the seller cover some of the closing costs, as it will allow the buyer to have more cash on hand for additional expenses that come with moving into a new home," he recommends. “Work closely with your real estate agent, who can negotiate this into your purchase offer."

Danielle O’Brien, broker and owner of Parkway Real Estate, explains how this approach works.

"Essentially, you’re borrowing more from the bank than you are actually paying the seller for the home. The seller is technically receiving this money. But they’re transferring it to the buyer to help with closing costs," says O’Brien. "However, I usually don’t advise my clients to write this into an offer unless it’s necessary. That’s because it can be seen as a less clean offer that could turn off the seller."

2. Use a cash gift from a loved one

Alternatively, you can ask for closing cost help from a relative, friend, or loved one.

Most major home buying programs, including FHA and conventional loans, allow you to use gifted funds for the down payment and closing costs.

VA loans and USDA loans do not require a down payment, but you could still use gift money for your closing costs.

The one thing you must do is make sure the gift funds are properly documented in order for them to be accepted by your mortgage lender.

3. Have the lender pay your closing costs

"Some lenders will also let you roll your closing costs into the loan by paying a higher interest rate," notes Graham. This is known as a lender credit.

"But while you’ll pay less money upfront with this strategy, you’ll end up paying more in the long run through compounded interest," he cautions.

Whatever approach you explore, weigh the pros and cons carefully.

4. Choose a less expensive home

Finding homes with lower sales prices can also make closing costs more manageable.

Many closing costs, such as the loan origination fee, are charged as a percentage of your loan amount. A smaller amount requires a smaller origination fee.

Other costs come as flat fees, though, so not all costs will be proportionate to your loan size. Smaller home sales prices have another advantage: more affordable monthly payments.

Down payment assistance

If you’re looking for closing cost assistance, you might like to know that there’s financial aid available for your down payment, too. 

In fact, down payment assistance is the primary focus for many of the programs described above. Closing cost assistance tends to be an extra benefit tacked on to down payment assistance (DPA) programs. 

"Depending on the program and down payment needed, you may be able to apply any remaining funds toward closing costs," explains Chris McDermott, a real estate investor and former mortgage broker.

"Some down payment assistance programs allow you to use the funds they provide for closing costs, while others may not," Graham says.

Low-down-payment mortgage options

Getting a loan that requires a low down payment could free up more money to spend on closing costs, whether you’re spending money you’ve saved or money you’ve accessed through a grant or loan.

FAQs about closing cost assistance

Check your home buying eligibility

Research local down payment and closing cost assistance programs in your area. Every state in the U.S. offers help.

It’s also worth looking into your mortgage options. Combining closing cost assistance with today’s low-down-payment loans could make buying your first home easier than you think.

If you’re ready, talk with a local mortgage professional to see what assistance programs you qualify for.