First-time homebuyer grants: What you need to know

Your house is likely to be the largest purchase you ever make, and saving up for the down payment can be the toughest part of the process.

Many banks have grants to help borrowers, especially first-time and lower-income buyers, make their down payment. Some can also be used to take the sting out of closing costs or other fees and if certain guidelines are followed, the money doesn't need to be repaid. Federal, state and local government agencies, nonprofits and community organizations also offer homebuyer grants. 

Some may be available to you even if you're not a first-time homebuyer. Here's what you need to know about homebuyer grants, including what's available, who qualifies and how to apply.

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First-time homebuyers are eligible for a variety of public and private grants. Most government agencies and financial institutions consider anyone who hasn't bought or owned a principal residence in the last three years a first-time homebuyer.

While some grants are marketed toward first-timers, existing homeowners are eligible for many programs. Exact eligibility standards vary greatly — most programs require the home to be your primary residence and many have income and home price limits. The grants may also be limited to certain cities or a select list of properties.

To ensure you can access all the programs you're eligible for, ask your lender about grant options before you apply for a mortgage.

Many top banks offer grants that first-time homebuyers can qualify for. Typically, your mortgage must be with that bank and the grant could be considered taxable income.

Bank of America 

With its America's Home grant, Bank of America offers up to $7,500 to lower mortgage rates for buyers of homes in low- to moderate-income census tracts. Maximum income and loan amount limits apply and applicants must have a loan-to-value ratio of at least 80%. 

Bank of America also has a down payment grant offering 3% of a house's purchase price, up to $10,000, in select markets. A homebuyer education course is required.

Chase 

The Chase Homebuyer Grant provides eligible borrowers with up to $7,500 to lower their interest rate, put towards closing costs or bolster their down payment.

It's available to borrowers with a Chase DreaMaker loan or a conventional, FHA or VA mortgage in 15 metro areas — including Atlanta, Chicago, Dallas, Los Angeles, Miami, New York and San Diego.

Wells Fargo

Wells Fargo's Homebuyer Access grant provides up to $10,000 towards a down payment for buyers who make no more than 120% of the average median income (AMI) in eight metro areas — including Atlanta, Dallas, New York and Philadelphia.

If you live within these cities and earn 80% of the AMI, you can also apply for a Wells Fargo Dream. Plan. Home mortgage for a closing cost credit worth up to $5,000.

PNC

Despite its name, the PNC Closing Cost Assistance Grant is a $5,000 credit that can be put toward your down payment, closing costs or other fixed charges. To qualify, you should earn no more than 80% of the AMI or the property you're buying needs to be in a qualifying community.

Citibank

Citibank's Lender Paid Assistance program includes a $7,500 credit for closing costs on a primary residence in specific areas in Atlanta, Austin, Dallas; Denver, Houston, Philadelphia and Cambridge, Massachusetts. Borrowers must meet income requirements and take a homebuyer education course.

The federal government sponsors a variety of homebuying grants, credits and forgivable loans.

HomePath Ready Buyer program

Closing costs can equal as much as 6% of your home's purchase price. Fannie Mae's HomePath program gives buyers up to 3% to put toward closing on a Fannie Mae property. These are as-is homes, however, and are usually available because of a foreclosure or short sale.

HomeReady and Home Possible credits

Through February 2025, borrowers who receive a Fannie Mae HomeReady or Freddie Mac Home Possible mortgage can qualify for a $2,500 credit toward a down payment or closing costs. Applicants cannot make more than 50% of the AMI in the area where the property is located.

Good Neighbor Next Door program

Issued by the U.S. Department of Housing and Urban Development (HUD), the Good Neighbor Next Door grant is available to teachers, firefighters, police officers and EMTs buying a home in the area they serve. HUD will cover up to 50% of the cost of your home, provided you have not purchased a home in the last 12 months and agree to stay in the property for at least three years.

You also have to work with a HUD-approved real estate broker and choose a home from a list of properties in HUD-designated revitalization areas. Homes are sold as-is and inventory is extremely limited.

Borrowers have to take out a second mortgage in the amount of the discount. If the three-year occupancy requirement is met, no interest will accrue and no payment is required.

You can research options for grants and forgivable loans on your state, local, or county housing website or through Freddie Mac's DPAOne database, which includes hundreds of programs. Here is a sample:

• Texas: Educators, police officers, firefighters and other public servants may qualify for the Home for Texas Heroes grant, which covers up to 2% of your total loan and closing costs. To be considered, you need to earn no more than 80% of the area median income and have a credit score of 620.
• Illinois: IHDA Access Forgivable is a down payment assistance program that forgives up to 4% of your mortgage over 10 years, up to $6,000. You need a 640 credit score, complete homeownership counseling and meet income and home price limits outlined by the state.
• New York City: The HomeFirst Down Payment Assistance program provides qualified first-time homebuyers with up to $100,000 towards a down payment or closing costs. You'll need at least a 3% down payment, make no more than 80% of the area median income and complete a homeowner education program.

The National Homebuyers Fund, a nonprofit that supports affordable housing, provides up to 5% of the home's purchase price to borrowers who agree to make the property their primary residence for at least five years.

Provided your lender participates in the program, this forgivable grant can be used toward a down payment or closing costs.

Even if you don't qualify for a grant, there are other programs to help you achieve your dream of homeownership:

• HomeOne mortgages are backed by Freddie Mac and allow first-time buyers with a credit score of 620 to put just 3% down.
• Conventional 97 mortgages also require just 3% down and can be backed by Freddie Mac or Fannie Mae.
• VA loans and USDA loans have no down payment requirements.
• Down payment assistance loans have payments that can be deferred or even forgiven.

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