5 First-Time Home Buyer Grants and How to Obtain Them

Buying your first home can feel overwhelming. There’s lots of paperwork involved and the process can be pretty lengthy. On top of that, many potential buyers struggle with the considerable down payment and closing costs, making the path to homeownership more complex. That’s where first-time home buyer grants can help. These subsidy programs can get you into your own house sooner.

What Are First-Time Home Buyer Grants?

Put simply, first-time home buyer grants provide you with financial assistance to cover certain costs along your journey to homeownership. As the name suggests, this type of program is for people who are purchasing a house for the very first time. 

The distinguishing factor between grants and other types of assistance programs is that there’s no repayment requirement for grant funding. It’s essentially a no-risk way to obtain the financing you need, if eligible. The money you receive must go towards the specific payment you obtained. 

Different Types of First-Time Homebuyer Grants

The actual amount and type of award vary greatly depending on the program. These are the most common types you’ll come across: 

• Down payment assistance: On average, expect to pay around $25,000 for a down payment as a first-time home buyer. Grants in this category can range from $5,000 to $15,000 or even higher. 
• Closing cost: Some cash awards cover only the property’s closing costs, such as title insurance and home appraisal fees. These costs are calculated based on the house’s loan amount or purchase price. In some cases, the grant includes a lump sum to cover both down payment and closing costs. 
• Mortgage tax credits: These financial assistance programs give you nonrefundable federal and state credits to reduce directly — dollar-for-dollar — tax obligations. President Biden recently unveiled plans to facilitate a $10,000 tax credit for first-time homebuyers to improve housing affordability. 
• Forgivable loans: This category covers zero-interest loans, which you don’t have to repay, provided you adhere to the program conditions.
• Interest rate discounts: These grants reduce the rate add-ons for your home financing, decreasing your total loan repayment amount. For example, the Federal Housing Finance Agency’s first-time homebuyer mortgage rate discount can save you between 0.25% and 1.75% on your loan’s interest, depending on your credit score.

5 First-Time Home Buyer Grants

Before jumping to the list, you should know no grant will cover 100% of the cost of a house. These programs only aim to alleviate the cost of homeownership, not eradicate it. You still need to obtain financing for the remaining balance, meaning you must meet the minimum eligibility requirements for a mortgage loan. 

1. National Homebuyers Fund (NHF)

The NHF provides down payment and closing cost assistance. This nonprofit awards grants of up to 5% of the home loan amount, provided you treat the property as a primary residence over a given period. You don’t even have to be a first-time homebuyer to qualify. 

The NHF grant is available nationwide through participating mortgage lenders, so you’ll need to find one and apply with them to obtain the funding. 

2. Bank of America Grants

Bank of America’s grant covers up to 3% of the purchase price or a maximum of $10,000 for down payment assistance for first-time home buyers. There’s also a grant of up to $7,500 in lender credits to help with closing costs. 

To get the grant, you’ll need to apply for your mortgage loan from Bank of America and ensure the program is available in your state. Eligibility requirements vary by state and may include income and purchase price limits. 

3. State and Local First-Time Homebuyer Grants

Keep in mind the federal government does not award grants directly to individual homebuyers. They allocate funds to states and certain municipalities, which award them to qualified residents. The type of grant and financing amount depends on the state. For instance, New York offers up to $100,000 in forgivable loans toward the down payment or closing costs for first-time home buyers. 

As the program scope and eligibility requirements vary by state, it’s best to speak with your loan officer to find state and local grants for which you qualify. You can also check out the 

4. Teacher Next Door® 

Teacher Next Door is America’s largest home-buying program, offering assistance with home ownership to public service professionals. The organization awards a grant of up to $8,000 to employees across a wide range of professions, including teachers, nurses, firefighters and law enforcement personnel. Qualified members can also receive down payment assistance of up to $10,681.00. 

Grant financing is distributed through participating lenders and banks. You’ll need to apply directly on the Teacher Next Door website. A program specialist will review the details with you and what programs you may be eligible for. 

5. BECU First Time Homebuyer Grant

BECU is a financial cooperative that provides members grants and other economic benefits. Eligible candidates can get up to $8,000 towards their down payment or closing costs with zero repayment required. 

You must be an existing BECU member to apply for the grant. You’ll also need to complete a homeownership course to establish your eligibility. The property should be a single-family residence and you must be willing to stay there for a minimum of three years. Lastly, the program is only available to residents in select states, including Washington, Oregon, California, Arizona and Illinois. 

The Downpayment Toward Equity Act 

As a first-time home buyer, you may be eligible to receive a $25,000 cash grant under the proposed Downpayment Toward Equity Act of 2024. The bill was first introduced in 2021 with no substantial headway, eventually expiring at the Congress level. However, President Biden recently announced the program’s revival in his 2024 fiscal year budget proposal.

This time, the bill aims to close racial wealth and homeownership gaps among first-generation homebuyers. Its purpose is to also provide financial assistance to socially and economically disadvantaged homebuyers, including African American, Native American, Hispanic and other diversities, to address the racial homeownership discrepancies. 

If approved, this grant could provide first-time home buyers with significant financial assistance, allowing them to reach the end of the purchasing process more quickly. 

Do You Qualify for These First-Time Home Buyer Grants?

If one of the programs listed above seems like a good fit, get in touch with the administrator directly to get additional details about next steps. They could also recommend a more fitting grant for your particular situation. Consider consulting a real estate professional, especially when reviewing the terms and conditions of any funding assistance program.