Are first-time homebuyer grants really free money?

Yes. True grants do not require repayment as long as you meet the terms (typically living in the home for 3-5 years). However, many "grants" are actually forgivable second mortgages that convert to grants after the forgiveness period. Always read the terms: true grants = no repayment, forgivable loans = no repayment if you stay the required period, deferred loans = repayment at sale or refinance.

How much free money can I get as a first-time homebuyer?

Grant amounts vary by program: Federal HUD Good Neighbor Next Door: 50% off home price (teachers, firefighters, EMTs, police). State DPA grants: $2,000-$25,000. Local city/county grants: $5,000-$50,000. Employer assistance: $2,500-$25,000 (many major employers offer this). Federal tax credit (MCC): up to $2,000/year. Total potential: $10,000-$50,000+ in combined assistance.

Who qualifies as a first-time homebuyer?

Most programs define first-time homebuyer as someone who has not owned a primary residence in the past 3 years. Some programs have different definitions: HUD requires no ownership in 3 years. Some state programs consider single parents or displaced homemakers as first-time even if they previously owned with a spouse. VA and USDA do not have first-time buyer requirements for their 0% down programs.

What is the difference between a grant and down payment assistance?

A grant is free money that never needs to be repaid (or is forgiven after a set period). Down payment assistance (DPA) can take several forms: (1) Grants — free money, no repayment. (2) Forgivable loans — second mortgage forgiven after 3-10 years. (3) Deferred loans — repaid at sale, refinance, or end of term. (4) Low-interest loans — second mortgage with below-market rate. Always ask which type your program offers.

Can I combine multiple first-time homebuyer grants?

Yes, in most cases. You can typically combine: a state DPA grant + a local city/county grant + an employer assistance program + a federal tax credit (MCC). However, total assistance usually cannot exceed the down payment plus closing costs. Some programs have stacking restrictions, so check with your lender and program administrator before applying.

First-Time Homebuyer Grants 2026: Free Money for Down Payments

Emily Chen

Construction & Commercial Loans Expert

August 4, 202616 min readExpert

Construction LoansCommercial MortgagesInvestment Property Financing

There are over 2,500 down payment assistance programs across the US, many offering true grants — free money that never needs to be repaid. First-time homebuyers can receive $2,000 to $25,000+ in combined assistance from federal, state, local, and employer programs. This guide covers every major program available in 2026.

Quick Summary: True grants = free money, no repayment. Available from: HUD (Good Neighbor Next Door 50% off), state housing finance agencies ($2K-$25K), city/county programs ($5K-$50K), employer assistance ($2.5K-$25K). Most programs require: 3-year no-ownership history, income limits, homebuyer education class, primary residence occupancy.

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Get matched with first-time homebuyer grant programs available in your area. Compare DPA, grants, and tax credits.

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Types of First-Time Homebuyer Assistance

Type	Repayment?	Typical Amount	Best For
Grant	Never	$2,000-$25,000	Buyers who want free money with no strings
Forgivable Loan	Forgiven after 3-10 years	$5,000-$20,000	Buyers planning to stay 5+ years
Deferred Loan	Repaid at sale/refinance	$5,000-$50,000	Buyers who need max assistance
Low-Interest 2nd	Monthly payments	$5,000-$15,000	Buyers who can afford small 2nd payment
MCC Tax Credit	N/A (tax credit)	$1,500-$2,000/year	All first-time buyers (ongoing savings)

Not sure which assistance type is right for you?

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Federal Programs: Free Money from the Government

1. HUD Good Neighbor Next Door (GNND)

Who: Teachers (pre-K through 12th grade), firefighters, EMTs, law enforcement officers
What: 50% off the list price of eligible HUD homes in revitalization areas
How much: Up to 50% of home price (e.g., $150K home for $75K)
Requirement: Must live in the home for 3 years as primary residence
Catch: Only available on specific HUD-owned homes in designated areas
Website: hud.gov Good Neighbor Next Door program

2. Federal Mortgage Tax Credit (MCC)

What: Federal tax credit up to $2,000/year on mortgage interest paid
How it works: 20-30% of mortgage interest becomes a tax credit (dollar-for-dollar), remainder is deduction
Who: First-time buyers meeting income and purchase price limits (varies by state)
Benefit: $2,000/year = $166/month extra in your paycheck via adjusted W-4 withholding
Duration: Life of the loan — not a one-time credit
Cost: Usually $500-$1,500 upfront fee, paid at closing or financed into loan
Availability: Offered through state housing finance agencies

3. FHA, VA, and USDA 0% Down Programs

VA: 0% down, no PMI, no lender fees (veterans and active military). Find VA-approved lenders in your area
USDA: 0% down in eligible rural/suburban areas (income limits apply)
FHA: 3.5% down with 580+ credit (not free money, but minimal down payment). Check FHA eligibility with 3.5% down
NACA: 0% down, no closing costs, below-market rate (income-based, no credit score requirement)

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Lenders who specialize in first-time buyer programs and can connect you with grants in your state.

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State Grant Programs: Top 15 States

State	Program	Max Grant	Type
California	CalHFA MyHome	$15,000	Forgivable (3 yr)
Texas	TSAHC HC	$25,000	Grant (3 yr)
Florida	FL HLP	$10,000	Forgivable (5 yr)
New York	SONYMA DPA	$15,000	Forgivable (10 yr)
Illinois	IHDA 1stHome	$10,000	Forgivable (5 yr)
Pennsylvania	PHFA Keystone	$10,000	Forgivable (5 yr)
Ohio	OHFA Grants	$5,000	Grant (5 yr)
Georgia	DCA Georgia Dream	$7,500	Forgivable (5 yr)
North Carolina	NCHFA $15K	$15,000	Forgivable (15 yr)
Michigan	MSHDA MI 10K	$10,000	Grant (5 yr)
Virginia	VHDA DPA Grant	$2,500	True Grant
Maryland	CDA DPA	$20,000	Deferred (30 yr)
Washington	WSHFC HomeChoice	$15,000	Forgivable (5 yr)
Colorado	CHFA SmartStep	$5,000	Grant (3 yr)
Minnesota	MHFA DPA	$15,000	Forgivable (5 yr)

Your state may offer $25K+ in free money — find out what you qualify for

Check State DPA Programs

Employer Homebuyer Assistance Programs

Many major employers offer homebuyer assistance as an employee benefit. These programs are often overlooked but can provide $2,500-$25,000 in free money.

Employer	Benefit	Amount
Google	Homebuyer grant	$25,000
Amazon	DPA for HQ employees	$5,000-$20,000
Microsoft	Home assistance program	$15,000-$25,000
Wells Fargo	LIFT program (employees + public)	$10,000
Bank of America	Employee DPA	$10,000
FedEx	Homebuyer grant	$7,500
P&G	Relocation + DPA	$5,000-$15,000
Many universities	Faculty/staff housing	$2,500-$25,000

Check with your HR department — many employers do not publicly advertise their homebuyer programs. Even smaller companies may offer assistance, especially in high-cost areas. Get pre-approved with a lender who can help you stack employer + state grants.

FHA 3.5% Down: Combine with Grants

FHA allows DPA grants to cover the 3.5% down payment. You could buy with $0 out of pocket.

Check FHA Eligibility

How to Apply for First-Time Homebuyer Grants

Check your eligibility: Confirm you meet the 3-year no-ownership rule, income limits, and purchase price limits for your area
Complete a homebuyer education course: Most programs require an HUD-approved counseling course (4-8 hours, $50-$150, online or in-person)
Find a participating lender: Grants are only available through approved lenders — your state housing finance agency can provide a list. Find DPA-approved lenders near you
Get pre-approved: Complete the mortgage application with your chosen lender. Start your pre-approval today
Apply for the grant: Your lender submits the DPA application on your behalf during the mortgage process
Find a home within program limits: Purchase price must be below the program cap (varies by area)
Close with grant funds: Grant money is applied at closing — you do not receive cash directly

Common Eligibility Requirements

Requirement	Typical Standard
First-time buyer	No primary residence ownership in past 3 years
Income limits	80%-120% of Area Median Income (AMI), varies by program
Purchase price limits	Varies by county, typically $300K-$700K
Credit score	640+ (varies by program)
DTI ratio	43% or less (some programs allow 45%)
Homebuyer education	HUD-approved course required by most programs
Occupancy	Must be primary residence (no investment properties)
Forgiveness period	3-15 years depending on program (must live in home)

Frequently Asked Questions

Can I buy a house with $0 out of pocket using grants?

Yes. Combine a DPA grant (covers down payment) + seller concessions (cover closing costs) + FHA 3.5% down. Some buyers get $0 out of pocket. Find $0-down grant programs in your state.

Do I have to repay first-time homebuyer grants?

True grants never require repayment. Forgivable loans are forgiven after 3-15 years if you live in the home. Deferred loans are repaid at sale or refinance. Always read terms. Get pre-approved and ask your lender about grant terms.

Can I combine multiple grants from different sources?

Yes. You can typically stack state DPA + city/county grants + employer assistance + MCC tax credit. Total assistance cannot exceed down payment + closing costs. Compare lenders experienced with grant stacking.

What if my income is too high for grant programs?

Most programs cap at 80-120% of Area Median Income. If you exceed limits, consider FHA 3.5% down, conventional 3% down, or VA 0% down. Compare low-down-payment loan options.

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Get matched with first-time homebuyer grants and DPA programs available in your area.

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