First-Time Homebuyer Grants and Programs in 2026: Free Money You Shouldn't Miss

[Down payment assistance](/blog/down-payment-assistance-programs) isn't a myth. Federal, state, and local governments collectively offer billions of dollars each year to help first-time buyers get into homes. The catch: most people don't know these programs exist, and the ones who do often assume they won't qualify.

This guide covers the major programs available in 2026, how they work, and how to apply.

What Counts as a "First-Time Homebuyer"?

The federal definition is more generous than you'd expect:

A first-time homebuyer is anyone who has not owned a principal residence in the past 3 years.

This means you qualify if you:

Have never owned a home
Owned a home but sold it more than 3 years ago
Owned a home with a former spouse but have since divorced
Owned a mobile home that wasn't permanently affixed to a foundation

Some state programs define it even more broadly.

Federal Programs

1. FHA Loans (Not a Grant, But Critical)

The Federal Housing Administration doesn't give grants directly, but FHA loans are the backbone of first-time buyer financing:

3.5% down payment (vs. 5%–20% for conventional)
Credit score minimum of 580
Down payment can come entirely from gift funds or grants
Full FHA guide here

2. HUD's [[Good Neighbor Next Door](/blog/teacher-mortgage-programs) Program](/blog/real-estate-investing-teachers)

Who qualifies: Law enforcement officers, firefighters, EMTs, and pre-K through 12th-grade teachers.

The benefit: 50% discount on the list price of HUD-owned homes in designated revitalization areas.

The catch: You must live in the home for at least 36 months. Properties are listed at HUDHomeStore.gov.

How to apply: Through a HUD-registered real estate broker. Listings are available for 7 days exclusively to Good Neighbor participants before opening to the general public.

3. HomePath Ready Buyer Program (Fannie Mae)

Who qualifies: First-time buyers purchasing Fannie Mae-owned foreclosed properties.

The benefit: Up to 3% of the purchase price in closing cost assistance.

Requirements: Complete a homebuyer education course through Framework (online, about 6–8 hours). Purchase a HomePath property listed on HomePath.com.

4. National Homebuyers Fund (NHF)

Who qualifies: Buyers using an NHF-approved lender. No first-time buyer requirement.

The benefit: Up to 5% of the loan amount in down payment and closing cost assistance. Available as a grant (no repayment) or a forgivable [second mortgage](/blog/best-heloc-lenders-2026).

Income limits: Vary by area, typically up to 115%–150% of area median income.

5. Chenoa Fund

Who qualifies: Borrowers who qualify for an FHA or conventional loan but lack down payment funds.

The benefit: 3.5% or 5% of the purchase price as a second mortgage. Options include:

Repayable second: 10-year term at 0% interest
Forgivable second: Forgiven after 36 months of on-time payments

Income limits: Household income cannot exceed 115% of area median income in most cases.

6. USDA Rural Development Loans

Who qualifies: Buyers purchasing in USDA-eligible rural and suburban areas (more areas qualify than you'd think — check eligibility maps).

The benefit: 0% down payment. Low mortgage insurance. Below-market interest rates for the direct loan program.

Income limits: Generally 115% of area median income.

State-Level Programs

Nearly every state runs a housing finance agency (HFA) with first-time buyer programs. Here are some of the largest and most generous:

[California](/blog/california-heloc-guide) — CalHFA

MyHome Assistance Program: Deferred-payment junior loan up to 3.5% of the purchase price (or appraised value, whichever is less) for down payment and closing costs.
CalHFA Zero Interest Program (ZIP): Up to 3% of the loan amount at 0% interest, deferred until sale, refinance, or payoff.
Dream For All: Shared [appreciation](/blog/home-appreciation-explained) loan covering up to 20% of the purchase price. You repay the original amount plus a share of the home's appreciation when you sell. Note: This program has been extremely popular and funds may be limited — check availability.
Income limits: Vary by county. Generally up to $200,000+ in high-cost areas.

Texas — TDHCA

My First Texas Home: Below-market interest rates plus up to 5% of the loan amount for down payment and closing costs (as a 30-year deferred forgivable second lien).
My Choice Texas Home: Similar benefits, no first-time buyer requirement.
Income limits: Vary by county, typically $100,000–$145,000.

Florida — Florida Housing

Florida Assist: Up to $10,000 as a 0%, deferred second mortgage. No monthly payments; repaid when you sell, refinance, or pay off the first mortgage.
HLP Second Mortgage: Up to $10,000 at 3% interest, 15-year term.
Income limits: Vary by county.

New York — SONYMA

Down Payment Assistance Loan (DPAL): Up to $15,000 (or $30,000 in targeted areas) as a 0%, no-monthly-payment second mortgage.
Achieving the Dream: Lower interest rates for buyers below 80% of area median income.
Income limits: $128,000–$172,000 depending on the area.

Illinois — IHDA

IHDAccess Forgivable: Up to 4% of the purchase price as a forgivable second mortgage (forgiven after 10 years).
IHDAccess Deferred: Up to 5% of the purchase price, 0% interest, deferred until sale or refinance.
IHDAccess Repayable: Up to 10% of the purchase price as a repayable second mortgage at a fixed rate.
Income limits: Vary by county, generally up to $112,000.

Colorado — CHFA

Down Payment Assistance Grant: Up to 3% of the first mortgage amount. True grant — no repayment.
Second Mortgage DPA: Up to 4% as a second mortgage at the same rate as the first.
Income limits: Vary by county.

Georgia — Georgia Dream

Standard DPA: Up to $10,000 as a 0%, deferred second mortgage.
PEN (Protectors, Educators, Nurses) DPA: Up to $12,500.
CHOICE DPA: Up to $12,500 for buyers in targeted areas or with household members who have disabilities.
Income limits: $90,000–$100,000 depending on household size.

Washington — WSHFC

Home Advantage DPA: Up to 4% of the loan amount at 0% interest, deferred for 30 years.
House Key Opportunity: Below-market rates combined with DPA.
Income limits: Vary by county, up to about $180,000 in high-cost areas.

Other Notable State Programs

State	Program	DPA Amount
Arizona	Home Plus	Up to 5% grant
Maryland	Maryland Mortgage Program	Up to $5,000 DPA
Michigan	MI Home Loan	Up to $10,000 DPA
Minnesota	Start Up/Step Up	Up to $18,000
North Carolina	NC Home Advantage	Up to 5% forgivable
Ohio	OHFA	2.5%–5% forgivable
Oregon	Oregon Bond	Up to $15,000 Cash Advantage
Pennsylvania	Keystone Advantage	Up to 4% (max $6,000)
Virginia	VHDA	Up to 2%–2.5% grant

Local and City Programs

Many cities and counties run their own programs on top of state offerings:

New York City: HomeFirst DPA — up to $100,000 as a forgivable loan (10-year forgiveness period)
Los Angeles: LIPA (Low Income Purchase Assistance) — up to $90,000 for low-income buyers
Chicago: Chicago Home Buyer Assistance — up to $40,000 in targeted areas
Houston: HCDD Homebuyer Assistance — up to $30,000
Philadelphia: Philly First Home — $10,000 grant (no repayment)
Austin: DPA programs through Austin Housing Finance Corporation — up to $40,000

How to find local programs: Search "[your city/county] first-time homebuyer assistance" or check with your state's housing finance agency. Many local programs fly under the radar.

Employer-Assisted Housing Programs

Some employers offer homebuyer benefits:

Direct grants or forgivable loans (common in healthcare, education, government)
Matched savings programs (employer matches your down payment savings)
Subsidized mortgages through employer partnerships with lenders

Ask your HR department. This is especially common for:

Hospital systems
Universities
Large tech companies
Government agencies
School districts

How to Stack Multiple Programs

In many cases, you can combine programs. For example:

FHA loan (3.5% down) +
State DPA (covers the 3.5%) +
Fannie Mae HomePath (3% closing cost credit) +
Employer grant ($5,000)

Result: You could potentially buy a home with near-zero out-of-pocket costs.

Rules for stacking:

Check each program's layering policy — some prohibit combining with other DPA
Your total assistance usually can't exceed your actual down payment + closing costs
Some programs require you to use an approved lender who participates in all the programs you're stacking

How to Apply: Step by Step

1. Identify Programs You Qualify For

Start with your state's housing finance agency website. Then check:

DownPaymentResource.com — database of 2,000+ programs searchable by zip code
HUD's local homebuying programs list

2. Complete Homebuyer Education

Almost every grant program requires a HUD-approved homebuyer education course. Options:

Framework (online): ~6–8 hours, ~$75
eHome America (online): ~6–8 hours, ~$99
In-person courses: Often free through local nonprofits. Find one at HUD.gov

Complete this early — certificates are valid for 12–24 months.

3. Find a Participating Lender

Most programs require you to work with an approved lender. Your state HFA website will have a list. These lenders know the paperwork and can process applications efficiently.

4. Get Pre-Approved

The lender will determine your eligibility for both the mortgage and the assistance program simultaneously.

5. Find a Home Within Program Guidelines

Some programs have purchase price limits or property type restrictions. Make sure the home you choose qualifies.

6. Apply for Assistance

Your lender typically handles the DPA application as part of the loan process. Some programs require a separate application — your lender will guide you.

Common Pitfalls

Waiting too long: Many programs have limited funding and operate on a first-come, first-served basis. When the money's gone, it's gone until the next funding cycle.
Not checking income limits: Programs use different income definitions (gross, adjusted, household). Verify which applies.
Ignoring recapture taxes: Some state programs have "recapture" provisions — if you sell within a certain period and your income has increased, you may owe additional tax. Ask your lender to explain this.
Assuming you don't qualify: Income limits are often higher than people expect, especially in high-cost areas.
Using a non-participating lender: If your lender isn't approved for the program, you can't access the funds.

FAQs

Do I have to pay back down payment assistance grants?

True grants don't require repayment. Many DPA programs offer forgivable loans that are forgiven after 5–10 years of living in the home. Some are deferred loans repaid when you sell or refinance. Read the terms carefully.

Can I use down payment assistance with any loan type?

Most DPA programs work with FHA, VA, USDA, and conventional loans. Some are restricted to specific loan types. Check program requirements.

What income qualifies for first-time homebuyer grants?

Income limits vary dramatically by program and location. In high-cost areas like San Francisco, limits can exceed $200,000. In lower-cost areas, limits might be $80,000–$100,000. Always check your specific program.

Can I get a grant if I've owned a home before?

Many programs use the 3-year rule — if you haven't owned in 3+ years, you're considered a first-time buyer. Some programs have no first-time buyer requirement at all (like the National Homebuyers Fund).

How long does it take to get approved for DPA?

Processing typically adds 1–2 weeks to the normal loan timeline. Budget 45–60 days from contract to closing when using DPA programs.

Can I use grant money for closing costs too?

Many programs allow funds to be used for both down payment and closing costs. Some are restricted to one or the other. Check the specific program terms.

Don't leave free money on the table. Use HonestCasa's program finder to see which down payment assistance programs are available in your area.

Down Payment Assistance Programs in 2026: Complete Guide
[[Conventional Loan Requirements](/blog/conventional-loan-requirements) 2026: Complete Guide](/blog/conventional-loan-complete-guide)
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First Time Homebuyer Grants 2026

Key Takeaways