What is The $25,000 Downpayment Toward Equity Act? [Explained]

The Downpayment Toward Equity Act is a bill that gives eligible first-time home buyers a $25,000 cash grant to help purchase a home.

The bill was originally introduced in the 117th Congress (2022-2023), and then again in the 118th Congress (2023-2024). It expired in both sessions without a vote, which is common. According to FactCheck.org, only 4 percent of bills ever pass into law.

However, the $25,0000 Downpayment Toward Equity Act could be proposed again in the current Congress, the 119th (2025-2026), because its two main sponsors — Representative Maxine Walters of California’s 43rd District and Senator Raphael Warnock of Georgia — are still serving in our nation’s capital.

The bill would provide down payment assistance to first-time, first-generation homebuyers, helping close racial wealth and homeownership gaps within the United States.

As of January 28, 2025, the Downpayment Toward Equity Act has not been introduced in the current Congress, so this article will discuss the bill as it may be written, based on prior iterations. Bills often change on their way to becoming law, so this page will update as new details emerge.

This article breaks down the Downpayment Toward Equity Act, explains who qualifies, how to apply for the grant, and when it could become law.

The $25,000 Downpayment Toward Equity Act - 2025 (119th Congress)

What is the Downpayment Toward Equity Act?

The Downpayment Toward Equity Act provides eligible first-time home buyers with a cash grant up to $25,000 cash for making a down payment on a home, paying closing costs on a mortgage, buying interest rate reductions via discount points, and paying other home purchase expenses.

When the Downpayment Toward Equity Act was proposed in the prior two congressional sessions, eligibility requirements were similar. Should the bill be re-introduced in the current 119th Congress (2025-2026), qualifying home buyers should expect to meet the following standards: 

1. Must be a first-time home buyer

The Downpayment Toward Equity Act defines first-time home buyer as a person who has not owned a home or co-signed on a mortgage loan within the last thirty-six months. Renters who owned homes more than three years ago qualify as first-time home buyers under the bill. 

Home buyers must be purchasing a home as a main residence and must move in within 60 days of closing.

2. Must be a first-generation home buyer or have lived in foster care

Eligible home buyers’ parents or legal guardians may not have owned a home during the 36 months prior to purchase. They are permitted to have owned a home more than 36 months ago. This requirement is waived for all home buyers who previously lived in foster care.

3. Must earn moderate income or lower

Eligible home buyers must earn an income that’s no more than 20 percent over the median income for a metropolitan area. For example, in Orlando, Florida, where the median income is $69,300, according to the Census Bureau, home buyers must earn $83,160 per year or less to claim their cash down payment grant.

Income exceptions are made in high-cost areas, such as New York, Los Angeles, and other cities where the cost of living is high. 

In high-cost areas, eligible home buyers must earn an income no more than 80 percent above the area median income. The Census Bureau shows that the 2023 area median income in San Francisco is near $141,500. Therefore, to qualify for the cash grant bill, home buyers must earn $254,700 annually or less.

4. Must use a mortgage backed by Fannie Mae, Freddie Mac, FHA, VA, or USDA

Eligible home buyers must use a mortgage backed by one of the five government mortgage agencies – Fannie Mae, Freddie Mac, FHA, VA, and USDA. Jumbo mortgages are ineligible for the program, along with other non-qualifying mortgage loans. Cash buyers are also ineligible for the Downpayment Toward Equity Act.

5. Must complete an online or in-person homeownership class

The Downpayment Toward Equity Act requires home buyers to complete a government-approved homeownership education course. Courses can be completed in 90 minutes and are proven to reduce mortgage default rate.

Check your eligibility and begin your application now.

How Does the Downpayment Toward Equity Act Work?

The standard cash award for first-time home buyers is twenty-thousand dollars, and an additional five thousand dollars is available to “socially disadvantaged individuals.”

According to the bill, a socially disadvantaged individual is anyone who “identifies as Black, Hispanic, Asian American, Native American, or any combination thereof, or who has been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”

Eligible home buyers can use the money for anything home purchase-related.

For example, your $25,000 cash grant can be split into a down payment, a lump sum for closing costs, and cash to buy down your mortgage interest rate.

• $20,000 to make a down payment on your home
• $3,000 for your real estate and title closing costs
• $2,000 to buy mortgage discount points

You can also use the first-time buyer cash grant to make accessibility renovations to your home.

The $25,000 Downpayment Toward Equity Act as a Social Program

The Downpayment Toward Equity Act was created so first-time, first-generation home buyers can purchase homes, grow roots, and build long-term household wealth.

According to the bill’s sponsors, the homeownership gap between white and non-white households is currently 25 percentage points, and the difference between white and black households is even larger at 30 percentage points.

The Downpayment Toward Equity Act, reminiscent of the 1968 Fair Housing Act and Housing & Urban Development Act, levels the playing field for disadvantaged groups. It makes U.S. homes more affordable for eligible, overlooked buyers and incentivizes the type of long-term homeownership that strengthens communities and neighborhoods.

If You Move Within 5 Years, You’ll Pay Some Money Back

The Downpayment Toward Equity Act promotes a long-term view of homeownership.

The bill requires homeowners to live in their homes for five years. Buyers who change residence or sell within 60 months forfeit a portion of their initial cash grant.

• Sell or move within Year 1: Repay 100% or $25,000
• Sell or move within Year 2: Repay 80% or $20,000
• Sell or move within Year 3: Repay 60% or $15,000
• Sell or move within Year 4: Repay 40% or $10,000
• Sell or move within Year 5: Repay 20% or $5,000

There are exceptions to the repayment rule for military deployment and other hardship circumstances. Your mortgage lender can explain your option

Will the Downpayment Towards Equity Act Become Law?

TThe Downpayment Toward Equity Act must be introduced as a bill and receive a vote before it can pass into law. As of today, January 28, 2025, the bill is not yet introduced.

However, compared to other first-time buyer bills, such as the First-Time Homebuyer Tax Credit Act, the Downpayment Toward Equity Act has more moving parts. 

Getting cash grants to home buyers requires coordination among multiple government agencies then, once it’s passed, Congress must make rules by which the federal government distributes grants to state governments, and how state government distribute money to local title companies. 

The bill also requires rules for privacy protection and reporting.

There could be a significant amount of time between the passage of the Downpayment Toward Equity Act and the first cash grant paid to a U.S. buyer.

Questions First-Time Buyers Ask About The $25,000 First-Time Home Buyer Grant

What changed with the Downpayment Toward Equity Act of 2023 from the Downpayment Toward Equity Act of 2021? 

The 2023 version of the Downpayment Toward Equity Act simplified the definitions of first-time home buyer and first-generation home buyer, and proposed a need-based allocation of cash grants to states. Beyond that, the two former versions of the bill are mostly the same.

Is the $25,000 First-Time Home Buyer Grant the same thing as the $15,000 First-Time Home Buyer Tax Credit?

No. The $15,000 First-Time Home Buyer Tax Credit gives a federal tax credit to eligible home buyers, which can be paid as cash or applied at closing as downpayment assistance Read more about the $15,000 First-Time Home Buyer Tax Credit.

How do I apply for the $25,000 Home Buyer Grant?

According to the bill’s language, eligible buyers will receive their cash grants at the time of settlement or escrow, facilitated by the mortgage lender and the title company. The cash grant will be waiting for them on their closing day.

How do I know if I earn too much for the Downpayment Toward Equity Act?

To determine whether your household income is within tolerance for the Downpayment Toward Equity Act, use this government lookup for your area and multiply the result by 1.2. If your income is at or below that figure, you may be eligible for $25,000. 

If I have to move for work during the first five years, do I have to repay the $25,000 grant?

Yes, if you move or sell your home within five years of using the program, you’re required to pay back at least some of your grant. 

If I’m a first-time home buyer, my fiancee is not a first-time home buyer. Can we use the $25,000 First-Time Home Buyer Grant?

No, to use the $25,000 First-Time Home Buyer Grant, all home buyers must be first-time buyers who meet the program’s eligibility standards. Learn more about what is a first-time home buyer.

Are there restrictions on how I use my first-time home buyer grant money?

Yes, you may only use grant funds to make a down payment on a home, pay closing costs, reduce your mortgage interest rate, or other home purchase-related expenses.

Will the $25,000 Downpayment Toward Equity Act pass into law before The HELPER Act?

The HELPER Act, for which the official title is “Homes for Every Local Protector, Educator, and Responder Act”, is a no-money-down, no mortgage insurance program for teachers, law enforcement officials, and firefighters. We don’t know which bill will pass into law first. It’s possible that neither passes into law.

Who was the primary sponsor of the Downpayment Toward Equity Act in the last Congress?

Rep. Maxine Waters (D-CA-43) was the primary sponsor of H.R.4231 in the 118th Congress, and Sen. Rafael Warnock was the primary sponsor in the Senate.

Who were the Downpayment Toward Equity Act of 2023 co-sponsors?

At the close of the last congress, there were 57 co-sponsors of H.R.4231 in the House.

Representative	Affiliation	Sponsor Date
Rep. Green, Al	[D-TX-9]*	06/21/2023
Rep. Garcia, Sylvia R.	[D-TX-29]*	06/21/2023
Rep. Pressley, Ayanna	[D-MA-7]*	06/21/2023
Rep. Vargas, Juan	[D-CA-52]	07/06/2023
Rep. Bonamici, Suzanne	[D-OR-1]	07/06/2023
Rep. Cleaver, Emanuel	[D-MO-5]	07/06/2023
Rep. Moore, Gwen	[D-WI-4]	07/06/2023
Rep. McGovern, James P.	[D-MA-2]	07/06/2023
Rep. Torres, Ritchie	[D-NY-15]	07/06/2023
Rep. Pocan, Mark	[D-WI-2]	07/06/2023
Rep. Meeks, Gregory W.	[D-NY-5]	07/06/2023
Rep. Williams, Nikema	[D-GA-5]	07/06/2023
Rep. Lynch, Stephen F.	[D-MA-8]	07/06/2023
Rep. Kamlager-Dove, Sydney	[D-CA-37]	07/06/2023
Rep. Tlaib, Rashida	[D-MI-12]	07/06/2023
Rep. Carbajal, Salud O.	[D-CA-24]	07/06/2023
Rep. Beatty, Joyce	[D-OH-3]	07/06/2023
Rep. Johnson, Henry C. “Hank,” Jr.	[D-GA-4]	07/06/2023
Rep. Smith, Adam	[D-WA-9]	07/06/2023
Rep. Meng, Grace	[D-NY-6]	07/06/2023
Del. Norton, Eleanor Holmes	[D-DC-At Large]	07/06/2023
Rep. McGarvey, Morgan	[D-KY-3]	07/06/2023
Rep. Pettersen, Brittany	[D-CO-7]	07/06/2023
Rep. Gomez, Jimmy	[D-CA-34]	07/06/2023
Rep. Horsford, Steven	[D-NV-4]	07/06/2023
Rep. Scanlon, Mary Gay	[D-PA-5]	07/06/2023
Rep. Crockett, Jasmine	[D-TX-30]	07/06/2023
Rep. Schiff, Adam B.	[D-CA-30]	07/06/2023
Rep. Jackson, Jonathan L.	[D-IL-1]	07/06/2023
Rep. Omar, Ilhan	[D-MN-5]	07/06/2023
Rep. Nickel, Wiley	[D-NC-13]	07/06/2023
Rep. Pelosi, Nancy	[D-CA-11]	09/14/2023
Rep. Levin, Mike	[D-CA-49]	09/14/2023
Rep. Jacobs, Sara	[D-CA-51]	09/14/2023
Rep. Hayes, Jahana	[D-CT-5]	09/14/2023
Rep. Gallego, Ruben	[D-AZ-3]	01/03/2024
Rep. Evans, Dwight	[D-PA-3]	01/03/2024
Rep. Lieu, Ted	[D-CA-36]	01/03/2024
Rep. Lee, Barbara	[D-CA-12]	01/03/2024
Rep. Ramirez, Delia C.	[D-IL-3]	01/03/2024
Rep. Ocasio-Cortez, Alexandria	[D-NY-14]	02/07/2024
Rep. Porter, Katie	[D-CA-47]	02/07/2024
Rep. Grijalva, Raúl M.	[D-AZ-7]	02/07/2024
Rep. Khanna, Ro	[D-CA-17]	04/12/2024
Rep. Lee, Summer L.	[D-PA-12]	04/12/2024
Rep. Amo, Gabe	[D-RI-1]	04/12/2024
Rep. Tokuda, Jill N.	[D-HI-2]	04/12/2024
Rep. Leger Fernandez, Teresa	[D-NM-3]	04/12/2024
Rep. Barragán, Nanette Diaz	[D-CA-44]	04/12/2024
Rep. Cohen, Steve	[D-TN-9]	09/10/2024
Rep. Thanedar, Shri	[D-MI-13]	09/10/2024
Rep. Balint, Becca	[D-VT-At Large]	09/10/2024
Rep. Landsman, Greg	[D-OH-1]	09/10/2024
Rep. Ryan, Patrick	[D-NY-18]	09/10/2024
Rep. Raskin, Jamie	[D-MD-8]	09/10/2024
Rep. Pallone, Frank	[D-NJ-6]	09/10/2024
Rep. Garcia, Robert	[D-CA-42]	09/10/2024

There were 6 co-sponsors in the Senate.

Representative	Affiliation	Sponsor Date
Sen. Butler, Laphonza R.	[D-CA]*	03/12/2024
Sen. Brown, Sherrod	[D-OH]*	03/12/2024
Sen. Van Hollen, Chris	[D-MD]*	03/12/2024
Sen. Padilla, Alex	[D-CA]	03/14/2024
Sen. Warner, Mark R.	[D-VA]	03/19/2024
Sen. Kaine, Tim	[D-VA]	03/20/2024

Which national housing organizations support the Downpayment Toward Equity Act as stakeholders?

According to the bill fact sheet, stakeholder support for the Downpayment Toward Equity Act includes the following national housing organizations.

National Housing Organization

Americans for Financial Reform Education Fund

Asian Real Estate Association of America

Center for Responsible Lending

Council of State Community Development Agencies

Habitat for Humanity International

Local Initiatives Support Corporation

Mortgage Bankers Association

National ADAPT

National Association of Realtors

National Coalition for Asian Pacific American Community Development (National CAPACD)

National Coalition for the Homeless

National Community Reinvestment Coalition

National Community Stabilization Trust

National Consumer Law Center (on behalf of its low-income clients)

National Council of State Housing Agencies

National Fair Housing Alliance

National Housing Conference

National Housing Law Project

National Housing Resource Center

National NeighborWorks Association

National Rural Housing Coalition

National Urban League

NFCC – National Foundation for Credit Counseling

PolicyLink

Prosperity Now

ROC USA

The Leadership Conference on Civil and Human Rights

UnidosUS

Veterans Association of Real Estate Professionals

Which state and regional housing organizations support the Downpayment Toward Equity Act as stakeholders?

According to the bill fact sheet, stakeholder support for the Downpayment Toward Equity Act includes the following state and regional housing organizations:

State and Regional Housing Organizations

California Reinvestment Coalition

Community Development Network of MD

Housing Action Illinois

Louisiana Fair Housing Action Center

Low Income Investment Fund (LIIF)

Massachusetts Affordable Housing Alliance

Massachusetts Fair Housing Center, Inc.

Neighborhood Housing Services of Los Angeles County

OnTrack WNC

Reinvestment Partners

Southern California Association of Nonprofit Housing

Which local housing organizations support the Downpayment Toward Equity Act as stakeholders?

According to the bill fact sheet, stakeholder support for the Downpayment Toward Equity Act includes the following local housing organizations and initiatives:

Local Housing Organizations

Center for Community Progress

Center for NYC Neighborhoods

Center for Responsible Lending

Community Coalition

Community Housing Development Corporation

Covenant Faith Outreach Ministries / Covenant CDC

EK Sattler Associates

Fair Housing Advocates of Northern California

Grounded Solutions Network

GS Community Ventures

HPP CARES CDE

HomeFree-USA

HomesFund

Hudson County Housing Resource Center

Lawrence CommunityWorks

LeadingAge

Lee County Housing Development Corp

Liberation in a Generation

Lifelines Counseling Services

Long Island Housing Services, Inc.

Los Angeles Homeless Services Authority

Marshall Housing Authority

Piedmont Housing Alliance

RESULTS

ROC USA

SouthFair Community Development Corp.

Spanish Coalition for Housing (SCH)

The Bronx Neighborhood Housing Services CDC Inc

Ventura County Community Development Corporation

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