First-Time Home Buyer Grants for 2024

How do you find grants to buy a house?

Grants to buy a house? That sounds too good to be true. What’s the catch?

Actually, there isn’t one. Many people receive home-buying grants every year. These are effectively gifts, which often don’t have to be repaid.

Grants to buy a house come from state agencies and nonprofits in the form of down payment assistance. They’re a 100% legit and acceptable way to cover your down payment when you get a mortgage.

Really, the only hurdles are availability and your ability to qualify.

In this article (Skip to…)

• Home buying grants
• Requirements
• Grants to buy a house
• Alternatives
• FAQs

What are first-time home buyer grants?

When we talk about grants to buy a house, what we’re really talking about is down payment assistance (DPA). A down payment grant can significantly lower the financial barrier to purchasing a new home.

There are more than 2,500 down payment assistance programs across the United States. Some of these are grants, while others are loans that may not have to be repaid (known as forgivable loans).

The money offered can be used for your down payment as well as for closing cost assistance until you move, sell, refinance, or pay down your home loan.

DPA programs often exist to help first-home buyers, low-income families, or otherwise disadvantaged buyers. However, each home buying grant program has its own eligibility requirements, and some are more wide-reaching than others.

Many of these down payment assistance programs are specifically designed as first-time home buyer grants. They can put homeownership within reach for buyers who might otherwise be locked out of the real estate market.

Do you qualify for any grants to buy a house?

If you want a grant to buy a house, you’ll have to qualify for it. Rules vary by program, so the following is just a sample of what you’re likely to see:

• Funds are often available on a first-come, first-served basis. So be prepared to wait for funding to be replenished or contact multiple programs
• Not all down payment assistance programs (DPAs) offer grants. Many provide low- or no-interest loans that you pay down in parallel with your first mortgage. Sometimes, those loans are forgiven over time, meaning they turn into grants
• Most (but not all) DPAs help only first-time home buyers. That often means you can’t have owned a home in the last three years. If you owned a home more than three years ago, you may still be eligible
• You often need to complete a few hours of housing counseling to qualify. Homeownership education courses are typically offered in conjunction with the grant program
• These grants and loans cannot be used for vacation homes or investment properties. DPA programs provide assistance to buyers needing a primary residence, meaning a home you’ll live in full-time
• Many DPAs have minimum credit scores and maximum income limits. So check their terms and conditions before you apply
• The grant or loan should not be an issue with your mortgage lender. It will just want to be sure you can comfortably afford all your mortgage payments without further assistance

If the above applies to you, you may be in line for low-cost loans or grants to buy a house. In that case, here are just a few of the housing programs that operate nationwide.

First-time home buyer grants to buy a house

First-time home buyer grants to buy a house offer valuable financial aid, helping new buyers cover costs like down payments and closing fees.

These grants make buying a first home more affordable and accessible. We’ll look at the different grants to buy a house, how to qualify for them, and how they can make your home purchase easier.

Fannie Mae Community Seconds Program

Fannie Mae Community Seconds is a program designed to make buying a home more affordable. It offers extra financial help for things like your down payment or home improvements.

It’s often paired with the HomeReady mortgage loan, which requires only 3% down and has flexible requirements for borrowers. Community Seconds is great for anyone buying or refinancing their primary residence, and it works with participating lenders, including government agencies, non-profits, and employers.

What’s really helpful is that you might not have to pay back some of this loan right away, or even at all, depending on certain conditions. Plus, it can be combined with your main mortgage to give you more financial flexibility.

Fannie Mae HomePath program

Another little-known option from Fannie Mae is the HomePath program, which assists buyers interested in purchasing foreclosure properties.

Via HomePath, Fannie helps buyers purchase REO (real estate-owned) properties. The HomePath program supports applicants through the entire home buying process, from finding and making an offer on a home to financing and closing.

The HomePath program also offers cash assistance: home buyers may receive up to 3% toward their closing costs when they complete a home buyer education course through the program.

Freddie Mac Affordable Seconds Program

Nearly identical to Community Seconds, the Freddie Mac Affordable Seconds program also helps participating lenders underwrite loans that offset closing costs and down payments with funds from non-traditional sources like non-profits and community gifts.

One of the best parts? It allows you to borrow a bit more against the value of your home, making it easier to cover your closing costs.

Many qualifying borrowers pair the Affordable Seconds program with Freddie Mac’s Home Possible mortgage loan. This low-income loan program offers flexible guidelines and lowers barriers to homeownership. While you’ll need a 660 credit score, Home Possible only requires a 3% down payment.

Affordable Seconds is also a subordinate or second mortgage that is paired with a Freddie Mac first-time home buyer loan.

Bank of America’s Home Buying Assistance

Bank of America provides two unique grant programs to aid with home buying expenses.

1. America’s Home Grant can offer up to $7,500 in lender credits for closing costs. This is mostly for nonrecurring closing costs, such as title insurance, recording fees, and appraisals. But the grant may also be used to purchase discount points that buy you a lower mortgage interest rate
2. Down Payment Grant can provide up to $10,000 to assist with the down payment. But only in specified geographical areas. The actual caps are 3% of the home’s purchase price, with a maximum of $10,000, whichever is lower

To take advantage of these grants, securing a mortgage with Bank of America is necessary. Be aware that the Down Payment Grant might have tax implications.

Chase Homebuyer Grant

Chase offers a Homebuyer Grant for those purchasing their primary residence in certain qualifying areas. Depending on the area’s census tract requirements, grants up to $7,500 are available, which borrowers can use to lower their mortgage interest rates with discount points.

The grant can also be 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 actually don’t have to be a first-time homebuyer to qualify, but you do need to find a mortgage lender that participates in the program. You can call the organization for assistance finding approved lenders in your area at 866-643-4968.

Good Neighbor Next Door Program

There’s one federal government program that makes all other forms of down payment assistance look insignificant. The Good Neighbor Next Door (GNND) program provides a 50% discount on the list price of the home.

But there’s a catch. It’s not technically a grant to buy a house, and it works only for qualified borrowers, including:

• Law enforcement officers
• Firefighters
• Emergency medical technicians
• Teachers working in prekindergarten through 12th grade

Additionally, the Good Neighbor Next Door program requires you to purchase a single-family home listed for sale by the U.S. Department of Housing and Urban Development (HUD) in designated “revitalization areas.”

If you’re in one of those occupations and are prepared to commit to living for at least three years in a neighborhood that’s still developing, then you’re going to want to explore this program further.

State and local grants to buy a house

Non-profit organizations and state Housing Finance Agencies (HFAs) primarily provide home-buying grants and DPAs. These organizations aim to connect people with affordable housing options.

These agencies receive federal grants each year to help home buyers with down payments and closing costs. They might offer aid in the form of:

• Grant: Financial assistance from a non-profit or government agency that is used to buy a home without requiring repayment.
• No-interest loan: A loan given for down payment or closing costs that does not accrue any interest.
• Low-interest loan: This type of loan offers home buyers a way to borrow money for down payments or closing costs at a significantly lower interest rate compared to standard loans.
• Forgivable loan: Financial assistance for down payments or closing costs that doesn’t have to be repaid if the buyer meets certain conditions, like residing in the home for a specific period or time
• Second mortgage: Additional financing that can be used alongside the primary mortgage to coverdown payments or closing costs

Unless you qualify for help from one of the sources listed below, your starting point for down payment assistance should be your local government agency or housing authority.

How do you find these types of grants to buy a house? The National Council of State Housing Agencies has a webpage that lists them all with links to each HFA in every state.

Mortgage credit certificate (MCC) program

The mortgage credit certificate (MCC) program doesn’t directly give grants to buy a house. But it does make home buying more affordable.

That’s because an MCC lets you claim a dollar-for-dollar tax credit for some of the mortgage interest you pay—up to $2,000 each year.

Over the years, that can add up to serious savings. And mortgage lenders may take MCCs into account when they’re deciding how much you can borrow.

Who’s in line for this help? Well, you’ll typically be a first-time buyer with a low or moderate income. Your income will be compared with the median income in your state or area to see if you qualify.

Home-buying grant alternatives

If you can get grants to buy a house, you’re in great shape. Not everyone qualifies for these programs. While home buying grants offer valuable assistance, there are other options available for those looking to purchase a home. These alternatives can provide flexible terms and support a variety of financial situations, making homeownership more accessible.

Even if you don’t find a grant, though, there are other loan types that can make your home purchase more affordable.

Conventional 97 loans

Conventional 97 loans present an attractive choice for homebuyers, requiring as little as 3% down. This program is an excellent alternative for those who may not qualify for grants to buy a house but still seek a low-down payment option.

Although if you make a down payment of less than 20%, you’ll have to pay private mortgage insurance (PMI) until your loan-to-value ratio reaches 80%.

FHA loans

The Federal Housing Administration (FHA) loans are a reliable alternative for home buyers, especially those with less-than-perfect credit. FHA loans are known for their flexible eligibility criteria, including lower credit score requirements.

These loans are particularly suitable for first-time home buyers, offering a manageable path to homeownership with reasonable down payment expectations. But you’re on the hook to 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, are a unique offering with significant benefits for veterans and active military members.

One of the best things about VA loans is that there is no maximum loan amount and no requirement for a down payment or ongoing mortgage insurance. This makes them an exceptional choice for eligible individuals seeking flexibility and financial support in their home buying journey.

USDA loans

USDA loans, guaranteed by the U.S. Department of Agriculture, are designed for homebuyers in rural areas. A key aspect of these loans is the consideration of household income, ensuring that the loans are accessible to those with moderate to low incomes.

USDA loans are favorable for those looking to settle in rural communities, offering advantageous terms like low interest rates and the possibility of no down payment.

FAQ: Grants to buy a house

Finding grants to buy a house

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

These grants, often part of down payment assistance programs, 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 home buying grants.