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12 First-Time Home Buyer Grants and Programs in 2022

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The typical home buyer uses up seven years saving to make a down payment. That’s a long time to wait to buy a home – especially because, over seven-year blocks, home values have always gone up. You’re chasing a moving target.

So, stop waiting.

You don’t need 20% down to buy a home, and dozens of first-time buyer programs can make buying your first home more accessible. Cash grants, tax credits, and mortgage rate discounts can help you reach your American Dream today.

Here is a collection of first-time home buyer grants and programs available for late 2022.

First-Time Home Buyer Grants, Programs, and Down Payment Assistance

What Is a First-Time Home Buyer Grant?

A first-time home buyer grant is a cash award paid to new US homeowners. Governments award grants on the local, state, and federal levels. Charitable and housing foundations award cash grants, too.

By definition, grants don’t require repayment because grants are a contribution to a public good. For first-time home buyers, that public good is homeownership and community.

Homeowners:

  • Stabilize neighborhoods with tax income
  • Increase business prosperity with local spending
  • Build generational wealth within families

Government research shows that giving first-time buyers cash grants of $10,000 increases homeownership rates by 34 percent. It follows, then, that Congress recently introduced nine bills promoting grants and tax credits for first-time home buyers, including the LIFT Act.

Homeownership is a greater economic good. Let’s look at the first-time home buyer grants and programs that may be available to you.

Popular First-Time Home Buyer Grants

1. The $25,000 Downpayment Toward Equity Program 

The Downpayment Toward Equity Act is a home buyer grant that awards up to $20,000 cash to first-generation home buyers, plus an additional $5,000 to buyers with socially or economically disadvantaged backgrounds.

Home buyers can use grant monies to make a down payment, pay closing costs, cover state and local taxes, and lower their mortgage rate with discount points.

The Downpayment Toward Equity Act still needs to pass into law. Its passage is expected in Q1 2023. 

Check your eligibility for the $25,000 Grant.

2. The National Homebuyers Fund

The National Homebuyers Fund is a non-profit public benefit corporation that sponsors home buyers with up to 5 percent of a home’s purchase price. In exchange for cash, home buyers agree to live in their home and make payments for five years, at minimum.  

Renters cannot directly apply for the National Homebuyers Fund grant – only your mortgage company can do it. Call (916) 444-2615 to get a list of participating lenders.

The first step in the grant process is getting pre-approved.

3. State and Local Government Cash Grants

State and local governments sometimes provide cash grants to qualified first-time buyers. Grant sizes range from $500 to $50,000 and can be applied toward mortgage closing costs, mortgage rate reductions, and down payments on a home.

Most state and local housing grants require buyers to meet minimum credit rating standards and earn an income within the lower two quartiles for the area.

To search for housing grants available in your area, visit your municipality website, search for “housing assistance” or “housing grants,” and review the program requirements.

See if you qualify for state and local government grants.

What is a First-Time Home Buyer Program?

First-time home buyer programs are mortgage loans and incentives that widen the pool of eligible US home buyers, sponsored by federal, state, and local governments. 

First-time buyer programs include mortgage rate reductions, down payment and closing cost assistance programs, and federal and state tax credits for first-time buyers of homes.

What Are the Different Types of First-Time Home Buyer Programs?

1. FHFA First-Time Home Buyer Mortgage Rate Discount

In late 2022, the Federal Housing Finance Agency (FHFA) discounted interest rates to make homes more affordable for first-time buyers.

To get the FHFA mortgage rate discount, home buyers must: 

  • Be a first-time home buyer
  • Use a Fannie Mae or Freddie Mac-backed 30-year fixed-rate mortgage
  • Earn an income at or below the area’s typical household income

Eligible buyers get mortgage rate discounts up to 2 percentage points below standard 30-year fixed-rate mortgage rates, which boosts a buyer’s maximum purchase price by 22 percent.

Mortgage rate discounts for first-time buyers vary based on credit score, down payment size, and property type. 

Buyers with low credit scores and small down payments get the largest interest rate adjustments on their Fannie- or Freddie-backed loans. 

Buyers with high credit scores get significant adjustments, too.

To find your assigned FHFA first-time buyer mortgage rate discount, get a complete pre-approval, including a credit score and income check. 

Get pre-approved for the first-time home buyer mortgage rate discount.

2. Low- and No-Down Payment Mortgages

A low-down payment mortgage is a mortgage that allows a down payment of 5 percent or less. 

First-time home buyers can choose from four conventional low-down-payment loans via Fannie Mae and Freddie Mac. Each allows a 3% down payment for buyers with average or below credit score requirements. See all home loans for first-time buyers.

HomeReady: HomeReady is a Fannie Mae-backed, 3-percent down payment mortgage. Its minimum FICO requirement is 620. Buyers using HomeReady to purchase a HomePath property receive an additional $500 closing cost credit.

Buyers can also use the HomePath Ready Buyer program and receive a 3 percent cash contribution toward the mortgage closing costs. HomeReady is for low- and moderate-income home buyers.

Home Possible: Home Possible is a 3-percent down payment mortgage that resembles HomeReady. Home Possible is a Freddie Mac-backed program available to low- and moderate-income home buyers.

Its minimum FICO requirement is 660.

Conventional 97: The Conventional 97 mortgage is a 3-percent down mortgage for buyers with all income levels. Fannie Mae and Freddie Mac offer the program.

It requires a 620 minimum FICO score.

FHA Mortgage: FHA mortgages are a 3.5-percent downpayment mortgage loan for residential properties. They’re backed by the Federal Housing Administration and set a credit score floor of 580. The FHA mortgage program is a catch-all, inclusive, low-down payment loan.  

USDA Mortgage: USDA mortgages are backed by the US Department of Agriculture for homes in suburban and rural communities.

The program allows 100% financing for home buyers with 580 credit scores or higher and modest income. USDA mortgage rates are often the lowest of all the low-down payment mortgage loans.

VA Mortgage: VA mortgages are backed by the Department of Veterans Affairs for the exclusive use of active-duty military members, veterans of the armed services, and surviving spouses.

VA loans offer 100% financing for buyers with a 620 minimum FICO score. Home buyers can use VA loans to purchase any residential property in the United States. 

See if you’re eligible by getting pre-approved.

3. Discounted Homes from HUD

The Good Neighbor Next Door Program (GNND) is a US Department of Housing and Urban Development (HUD) program that sells homes to first-time buyers at half-price. Good Neighbor Next Door is available to teachers, firefighters, law enforcement officials, and emergency medical technicians who want to live in the same community where they work. 

Get pre-approved to check your eligibility for the Good Neighbor Next Door Program.

4. Down Payment Assistance Programs (DPA)

Down payment assistance programs are loans first-time buyers use to make their down payment instead of using cash. State and local governments sanction most DPA programs. Terms are usually favorable.

Down Payment Loans: Down payment loans are loans that replace a home buyer’s cash down payment with borrowed money at favorable terms, including an ultra-low interest rate.

Home buyers who use down payment loans may limit their mortgage options to FHA or conventional financing, so check with a lender before applying.

Learn more about down payment assistance programs.

Deferred Mortgages: Deferred mortgages are modified mortgages that require no repayment while you live in your home. Deferred mortgages are only payable when you sell your home or refinance it.

Deferred mortgages are available for up to $25,0000 via municipal governments and local foundations. They’re frequently limited to first-time buyers whose income falls below area averages and whose credit history shows a record of on-time payments.

Find out if you’re eligible by getting pre-approved.

5. Forgivable Mortgages

Forgivable mortgages are mortgages released after a home buyer satisfies a specific condition – usually making on-time payments for five years. 

Here’s how it works: A first-time buyer uses a conventional mortgage to finance a home and gets a forgivable loan to make its $15,000 down payment. 

Five years later, if the buyer still lives in the home and has made on-time payments as agreed, the lender will write off the smaller $15,000 mortgage. The loan is forgiven, and its lien is removed from the title.

If you’ve ever heard of cities paying people to move, you’ve seen forgivable mortgages in action. Governments love them because forgivable mortgages boost homeownership, neighborhood, and community investment — the three pillars of a robust municipal economy. 

Homebuyer.com offers a nationwide forgivable mortgage through our instant mortgage application. Recipients must have an average credit rating, qualify for an FHA loan, and agree to use a 30-year fixed-rate mortgage, among other qualifications.

Buyers may also be required to attend a 1-hour online educational seminar.

Get pre-approved for a forgivable mortgage.

6. First-Time Home Buyer Tax Credit

Tax credits are reductions to a person’s federal tax liability to promote specific buyer behaviors, including buying a first home.

The IRS gives homeowners tax credits for certain upgrades and home improvements. Many homeowners claim their mortgage interest paid as an annual tax deduction. However, the big win for this year’s home buyers is the $15,000 tax credit for first-time home buyers.

The First-Time Home Buyer Tax Credit Act is working its way through Congress. The first-time buyer program would refund up to $15,000 in tax liability to first-time home buyers retroactively to December 31, 2020.

Check your eligibility for the program here.

7. Closing Cost Assistance Programs for Home Buyers

Closing cost assistance programs are home buyer stimulus plans that pay up to 100% of a buyer’s purchase closing costs, including title expenses, transfer taxes, and mortgage fees.

The National Council of State Housing Agencies website maintains an active list of closing cost assistance programs. Programs require buyers to meet minimum credit standards and income thresholds and homes to meet the minimum safety and quality standards.

The first step towards getting closing cost assistance is getting pre-approved.

Frequently Asked Questions from the Chat

How do you buy a house if you have no money?

Home buyers with no money for a down payment can use housing grants, down payment assistance, and forgivable mortgages to purchase a home with no money down. Some home buyers are eligible for 100% mortgages via the USDA and VA loan programs. 

Read more about buying a house with no money.

What is an NHF grant?

An NHF grant is a housing grant for first-time home buyers awarded by the National Homebuyers Fund. NHF awards housing grants for up to 5 percent of a home’s purchase price.

Which loan is best for first-time home buyers?

Most first-time home buyers use 30-year fixed-rate mortgages backed by Fannie Mae or Freddie Mac to purchase their first home, but that doesn’t make the 30-year fixed the “best loan” for first-time buyers. Mortgages are not one-size-fits-all. Get pre-approved and let your lender advise you on which mortgage loan is best for you.

Read more of our other first-time home buyer tips.

Can I get a lower mortgage rate?

Yes, there are ten ways that first-time home buyers get lower mortgage rates.

Get pre-approved for a mortgage today.

Dan Green
Dan Green

Dan Green is a former mortgage loan officer and an industry expert. He's appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.

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