There is no single federal "first-time home buyer grant" that writes a check for a down payment. What does exist is a network of state Housing Finance Agency (HFA) programs, federal loan products with low or zero down-payment requirements, forgivable second mortgages, and a few targeted federal grant programs for specific buyer groups. Used together, they can cover most or all of a buyer's down payment and closing costs in 2026.
This page covers the real programs and how to combine them.
State Housing Finance Agency programs
Every U.S. state and most large cities operate a Housing Finance Agency (HFA) offering first-time-buyer assistance. Programs typically include:
- Down-payment assistance — grants or forgivable second mortgages of $5,000–$25,000+, with forgiveness after 5–10 years of owner-occupancy.
- Closing-cost assistance — smaller grants of $2,000–$10,000.
- Below-market first mortgages paired with the assistance.
- Mortgage Credit Certificates (MCCs) — a federal income-tax credit of up to $2,000/year for the life of the mortgage on a qualifying first home.
Eligibility is usually defined by:
- First-time homebuyer status (often defined as not having owned a home in the past three years).
- Income limits set as a percentage of Area Median Income.
- Purchase-price limits.
- Completion of a HUD-approved homebuyer education course.
- Owner-occupancy for a required period.
Find your state HFA via NCSHA.
Federal loan programs that work alongside grants
These are not grants, but they reduce the cash a buyer must bring to closing — and most can be combined with HFA grants:
FHA loans
FHA-insured mortgages allow as little as 3.5 percent down with a credit score of 580+ (or 10 percent down with a score of 500–579). Loan limits vary by county. FHA loans are widely accepted and pair easily with state HFA down-payment assistance. See hud.gov/buying.
VA loans
For eligible service members, veterans, and surviving spouses, the VA-guaranteed home loan offers no down payment and no monthly mortgage insurance. There is a one-time VA funding fee that can often be financed into the loan. See va.gov/housing-assistance.
USDA Section 502 Guaranteed and Direct Loans
For moderate- and low-income buyers in eligible rural areas, USDA loans offer zero down payment. The Direct Loan even subsidizes the interest rate down to as low as 1 percent effective for very-low-income households. Map eligible areas at eligibility.sc.egov.usda.gov.
Conventional 97 and HomeReady / Home Possible
Fannie Mae and Freddie Mac offer conventional 3 percent-down loan products with reduced mortgage insurance for low- and moderate-income buyers. Available through almost any lender.
Targeted federal grant-style programs
HUD Good Neighbor Next Door
Law enforcement officers, pre-K–12 teachers, firefighters, and EMTs can buy HUD-foreclosed homes in revitalization areas at 50 percent off the list price, with an FHA loan available at a $100 down payment. The 50 percent discount is structured as a silent second mortgage forgiven after 36 months of owner-occupancy. See hud.gov/program_offices/housing/sfh/reo/goodn.
HUD Dollar Homes
Single-family HUD-owned homes that have been on the market more than six months may be offered to local governments for $1, then re-sold to qualifying buyers through local programs. Inventory is small and varies by region.
Section 184 Indian Home Loan Guarantee
For enrolled members of federally recognized tribes, this program allows low down payments and competitive rates on homes on or off tribal land. Administered by HUD's Office of Native American Programs.
Native American Direct Loan (NADL)
A VA program for eligible Native American veterans buying or building on federal trust land.
Local and employer programs
- City and county down-payment grants — many municipalities run their own programs funded by HUD HOME and CDBG dollars.
- Employer-assisted housing — some hospitals, universities, and large employers offer forgivable down-payment loans to employees who buy near work.
- Nonprofit housing programs — Habitat for Humanity builds zero-interest mortgages for income-qualified buyers; NeighborWorks affiliates run regional programs.
How to apply
- Take a HUD-approved homebuyer education course. Find a counselor at hud.gov/findacounselor. Most state HFAs require the certificate.
- Pull your credit reports at annualcreditreport.com. Resolve errors before applying.
- Identify your loan product. FHA, VA, USDA, or conventional — based on credit, military status, and area.
- Contact your state HFA (via NCSHA) for current down-payment and closing-cost programs. Get a list of HFA-participating lenders.
- Apply with an HFA-participating lender for both the first mortgage and the assistance.
- Make sure the contract and lender know which assistance program you are using; some programs require approval before closing.
- Occupy the home for the required period to keep the assistance forgivable.
There is no application fee for legitimate government home-buyer assistance, and HUD-approved housing counseling is free or very low cost. Any company demanding a fee to "release" a first-time-buyer grant is a scam. Report scams to the FTC at reportfraud.ftc.gov.
Common questions
Is there a federal first-time home buyer grant for everyone? No. There is no flat federal grant available to all first-time buyers. The federal role is mostly through loan guarantees (FHA, VA, USDA) and by funding state HFAs that run grant-style assistance.
What is a forgivable second mortgage? A silent second loan recorded against the home that does not require payments and is forgiven on a schedule (often pro-rata over 5–10 years) as long as you occupy the home. If you sell or refinance early, you may have to repay the unforgiven balance.
Do I have to repay down-payment assistance if I sell? Often yes, in part. Read your subordinate-loan documents carefully — they specify the recapture schedule.
Are down-payment grants taxable income? Generally no when structured as forgivable assistance for a primary residence, but consult a tax professional.
Can I combine multiple programs? Yes, frequently. An FHA first mortgage plus a state HFA down-payment grant plus a city closing-cost grant plus an MCC tax credit is a common stack. Your HFA-approved lender will know which programs layer cleanly.
First-time buying assistance is real but fragmented across state and federal programs. Start with your state HFA and a HUD-approved counselor before you make an offer.