First-Time Homebuyer Grants: Your Complete Guide
Discover free money programs to help cover down payments and closing costs for first-time home purchases.
Understanding First-Time Homebuyer Grants
Purchasing your first home is one of the most significant financial decisions you’ll make, and the costs involved can feel overwhelming. Between the down payment, closing costs, and other associated expenses, many aspiring homeowners struggle to accumulate sufficient funds to complete a purchase. Fortunately, first-time homebuyer grants offer a powerful solution to this challenge. These grants provide funds that can help you cover a down payment on a home, as well as closing costs, and because the money is a grant, you don’t have to pay it back.
First-time homebuyer grants differ from other types of down payment assistance that require you to repay the funds or meet certain requirements to have the funds forgiven. They also differ from affordable mortgage programs that come with perks like a lower mortgage rate or lower mortgage insurance premiums. Understanding the distinction between these various assistance programs is crucial for identifying which options best suit your financial situation.
What Are First-Time Homebuyer Grants?
A first-time homebuyer grant is essentially free money provided by government agencies, nonprofit organizations, banks, or employers to help qualified buyers afford homeownership. Unlike loans, grants do not require repayment, making them an attractive option for those struggling with the financial barriers to home ownership. These grants can be used to cover various home purchase expenses, including down payments, closing costs, and in some cases, even mortgage points to buy down your interest rate.
The availability and terms of grants vary significantly depending on the source. National organizations, major banks, state housing finance agencies, and local nonprofits all offer different grant programs with unique eligibility criteria and benefit amounts. By exploring all available options, first-time homebuyers can potentially access substantial financial assistance to make their homeownership dreams a reality.
Eligibility Requirements for First-Time Homebuyer Grants
While specific eligibility requirements vary by program, most first-time homebuyer grants target low- to moderate-income borrowers. Understanding these common requirements helps you determine which programs you may qualify for and how to prepare your application.
Income Limits
First-time homeowner grants tend to be geared toward low- to moderate-income borrowers. Generally speaking, households that earn 80 percent or less of their area median income (AMI) qualify as “low-income,” and households that earn more than 80 percent and up to 100 percent of the AMI qualify as “moderate income.” You can find your local AMI through your state’s housing finance authority or online resources to determine if you meet the income threshold for available programs.
Common Qualification Criteria
Beyond income limits, most grant programs share several common requirements:
- Home Price Limits: These limits vary based on your state or local housing market. Grants are typically available only for properties within a certain price range to ensure assistance reaches buyers in need.
- Borrower Contribution: Buyers must typically chip in some cash of their own, often either one percent of the purchase price or $1,000, whichever is greater. This requirement ensures buyers have a personal stake in the transaction.
- Residency Status: Most grant programs require the home you’re buying to be your primary residence, not a rental or a second home. Investment properties and vacation homes typically don’t qualify.
- Homebuyer Education: Many grant programs require you to complete a homebuyer education course before receiving the funds. These courses teach essential skills like budgeting, understanding credit, and the home buying process.
- Credit Score Requirements: Most programs establish minimum credit score requirements, though standards vary by lender and grant type.
Eight First-Time Homebuyer Grants to Consider
1. National Homebuyers Fund
The nonprofit National Homebuyers Fund sponsors down payment and closing cost grants that can total up to five percent of your home’s purchase price. One advantage of this program is that you don’t have to be a first-time homebuyer to qualify, making it accessible to repeat buyers as well. However, you do need to find a mortgage lender that participates in the program and agrees to forgive the funding. You can call the organization at 866-643-4968 for help finding local lenders and learning more about eligibility.
2. Bank of America Grant Programs
Bank of America offers two grant options to help homebuyers in certain areas with a down payment and closing costs. The America’s Home Grant provides up to $7,500 in lender credits for closing costs, while the Down Payment Grant provides up to $10,000 in down payment help. However, you’ll have to get your mortgage from Bank of America to qualify. Additionally, the Down Payment Grant could be counted as taxable income, which is an important consideration for tax planning purposes.
3. Chase Homebuyer Grant
The Chase Homebuyer Grant is available to homebuyers in select areas of the United States. The program provides grants of up to $5,000 that apply first toward buying down your interest rate, then toward lender fees, and then toward a down payment. This flexible structure allows the grant funds to be applied where they provide the most benefit for your specific situation. You can qualify for the Homebuyer Grant with Chase’s DreaMaker loan, or a conventional, FHA, or VA mortgage, providing options for different loan types.
4. Wells Fargo Grant Programs
Wells Fargo offers two types of assistance grants to eligible buyers in certain areas. The Homebuyer Access grant provides down payment help of up to $10,000 for low- to moderate-income borrowers, while the Dream. Plan. Home. credit provides up to $5,000 for closing costs to low-income borrowers. As with other grants offered by banks and lenders, you’ll need to get your mortgage from Wells Fargo to qualify. You can check your eligibility on the Wells Fargo website.
5. Additional National Programs
Beyond the major national banks, several other organizations offer grant programs. Various mortgage lenders and nonprofit organizations have developed their own assistance programs. It’s worth researching lesser-known lenders and nonprofits in your area, as some may offer generous grant amounts or more flexible eligibility requirements than the major national programs.
6. State and Local First-Time Homebuyer Grants
Many states and cities offer grant programs for first-time homebuyers that can be quite substantial. Check with your state’s housing finance authority or real estate agent for more information about programs available in your area. A local mortgage lender might also be able to point you toward free money. Here are some examples of state and local programs:
- First Federal Bank of Kansas City offers eligible buyers a grant of up to $5,000.
- The Federal Home Loan Bank of New York offers up to $30,000 in grant funds to first-time homebuyers, representing one of the most generous programs available.
- Tri Counties Bank in California offers four-to-one matching grants of as much as $32,000, providing substantial assistance for qualifying California buyers.
How to Apply for a First-Time Homebuyer Grant
The application process for first-time homebuyer grants involves several key steps. By following this structured approach, you can maximize your chances of successfully obtaining grant funding.
Step 1: Research
Begin by conducting thorough research into grants you might qualify for. Search for opportunities from local and state governments, as well as nonprofits and lenders. Visit your state’s housing finance authority website, contact local nonprofits focused on housing assistance, and speak with mortgage lenders about their grant programs. Create a list of programs that match your income level, location, and timeline.
Step 2: Improve Your Credit Score
Many first-time homebuyer grants require a minimum credit score. If your score is below the threshold for programs you’re interested in, take time to improve it before applying. You can improve your score by making on-time payments on all bills, paying down existing debt, and avoiding new credit inquiries. Even a modest improvement in your credit score can open up additional program options.
Step 3: Collect Documentation
To apply, you must typically provide extensive documentation of your income and assets. This generally includes at least two months of recent pay stubs, in addition to employment verification. Additional documentation might include tax returns, bank statements, proof of assets, and identification documents. Gathering these materials in advance can streamline the application process significantly.
Step 4: Apply
Follow the organization’s application instructions carefully to apply for the grant. Each organization has specific procedures, deadlines, and requirements. Submit all required documentation and respond promptly to any requests for additional information. Some organizations accept applications online, while others may require in-person submissions or phone interviews.
Comparing Grant Programs
| Program Name | Maximum Grant Amount | Loan Type Required | Key Requirements |
|---|---|---|---|
| National Homebuyers Fund | 5% of purchase price | Participating lender | Participate lender required |
| Bank of America America’s Home Grant | $7,500 | Bank of America mortgage | Bank of America lender |
| Bank of America Down Payment Grant | $10,000 | Bank of America mortgage | May be taxable income |
| Chase Homebuyer Grant | $5,000 | Multiple loan types | Select geographic areas |
| Wells Fargo Homebuyer Access | $10,000 | Wells Fargo mortgage | Low- to moderate-income |
| Federal Home Loan Bank of New York | $30,000 | Participating lender | New York area borrowers |
| Tri Counties Bank California | $32,000 | Tri Counties Bank | 4-to-1 matching requirement |
Maximizing Your Grant Opportunities
To increase your chances of obtaining grant funding, consider these strategies. First, apply to multiple programs simultaneously, as you may qualify for assistance from several sources. Second, ensure you meet all eligibility requirements before applying, as incomplete applications are often rejected. Third, maintain strong credit and financial records, as lenders want to see responsible financial management. Finally, work with a knowledgeable mortgage professional who understands various grant programs and can help direct you to the best options for your situation.
Frequently Asked Questions
Q: Do I have to repay a homebuyer grant?
A: No, grants are considered free money and do not require repayment. This distinguishes them from loans or other assistance programs that must be repaid or forgiven under specific conditions.
Q: What defines a “first-time homebuyer” for grant purposes?
A: Generally, first-time homebuyers are those who have not owned a home in the previous three years. Some programs, like the National Homebuyers Fund, don’t require first-time buyer status.
Q: Can I use a grant for any type of property?
A: Most grants require the property to be your primary residence. Investment properties, rental homes, and vacation homes typically do not qualify for assistance.
Q: Are grant funds considered taxable income?
A: This depends on the specific program. Some grants, particularly those from banks like Bank of America’s Down Payment Grant, may be considered taxable income. Consult with a tax professional or the grant provider for clarification.
Q: How long does the grant application process take?
A: Timeline varies by organization. Some programs can be processed in a few weeks, while others may take several months. Start the application process early in your home buying journey to avoid delays.
Q: What if I don’t qualify for a grant?
A: If grant programs aren’t available to you, explore other first-time homebuyer options such as FHA loans, VA loans, USDA loans, or low-down-payment conventional programs that require just 3% down.
Q: Can I combine grants from multiple sources?
A: In some cases, yes. However, certain programs may have restrictions on combining assistance. Always verify with each program provider before applying to multiple sources.
References
- Guide To First-Time Homebuyer Grants — Bankrate. 2025. https://www.bankrate.com/mortgages/first-time-homebuyer-grants/
- Guide to First-Time Homebuyer Loans and Programs — Bankrate. 2025. https://www.bankrate.com/mortgages/first-time-homebuyer-loans-and-programs/
- First-Time Homebuyer Qualifications — Bankrate. 2025. https://www.bankrate.com/mortgages/first-time-homebuyer-explained/
- Down Payment Assistance Programs — Bankrate. 2025. https://www.bankrate.com/mortgages/down-payment-assistance/
- First-Time Homebuyer Resources — Bankrate. 2025. https://www.bankrate.com/mortgages/first-time-homebuyer-guide/
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