First-generation home buyer grants give down payment and closing cost money to people whose parents have never owned a home. There is no dedicated federal program as of 2026, so the money comes from state housing finance agencies, Federal Home Loan Banks, and community nonprofits. Amounts typically run from a few thousand dollars up to about $25,000, depending on where you buy and which program funds the assistance.
Who Counts as a First-Generation Buyer
First-time and first-generation are not the same thing. A first-time buyer is anyone who hasn’t owned a home in the past three years. First-generation adds a family requirement on top of that: your parents or legal guardians also cannot currently own a home, and under the industry-standard definition, they cannot have owned one in the three years before your loan date either.
Fannie Mae and Freddie Mac published this aligned definition in 2024. Every borrower on the loan has to meet all of it: you’re buying the home as your primary residence, you haven’t held an ownership interest in any property in the previous three years, and no parent of yours has either. “Parent” means a biological or legally adoptive parent. Certain ownership types, like heir’s property and undeveloped land, don’t count against your parents. People who aged out of foster care or were legally emancipated qualify even if their parents did own property.
You self-certify this status in writing. The standard document is Fannie Mae’s Form 1109, which every borrower on the loan signs.1Fannie Mae. First-Generation Homebuyer Loans The form asks for your parents’ names and addresses so the lender and housing agency have a record they can verify against later.2Fannie Mae. First-Generation Homebuyer Fact Sheet Take it seriously. Making false statements on a mortgage application is a federal crime punishable by up to 30 years in prison, a fine of up to $1,000,000, or both.3Office of the Law Revision Counsel. 18 USC 1014 – Loan and Credit Applications Generally The same range applies under the federal bank fraud statute.4Office of the Law Revision Counsel. 18 USC 1344 – Bank Fraud Housing agencies conduct post-closing audits.
How Much Money You Can Get
State housing finance agency programs generally offer between $5,000 and $25,000. Some cap the assistance at a fixed dollar amount. Others tie it to a percentage of the purchase price.
The structure matters as much as the amount. Three common forms show up:
- Outright grants that never need to be repaid.
- Forgivable zero-interest loans, often forgiven at 20 percent per year over five years, so you owe nothing after year five as long as you’re still living in the home.
- Deferred second loans that come due only when you sell, refinance, or move out.
Read the specific lien document before closing. A grant that’s fully forgiven over five years and one that forgives on a single cliff at year ten behave very differently if life changes and you have to sell early.
A Note on the Proposed Federal Grant
You’ll see references online to the Downpayment Toward Equity Act, which was reintroduced as S.967 in March 2025 and would create a dedicated federal first-generation grant of up to $20,000, or $25,000 for buyers classified as socially and economically disadvantaged. The bill sits in the Senate Banking Committee and has not advanced past committee in any Congress since 2021. It is not a program you can apply to.
Income, Property, and Asset Limits
Nearly every program caps your household income as a percentage of the Area Median Income for the county or metro where you’re buying. Most ceilings sit between 100 and 120 percent of AMI. Some programs use 80 percent AMI for their lowest-income tiers and stretch to 150 percent in high-cost areas. HUD publishes income limits annually and adjusts them by family size, so a household of four has a higher dollar cap than a household of two in the same market.
The home has to be your primary residence. Investment properties, vacation homes, and homes you plan to rent out are all disqualified. Single-family houses, townhomes, and condominiums generally qualify. Two- to four-unit properties often qualify if you live in one of the units. Manufactured homes without a permanent foundation, undeveloped land, and co-ops are usually excluded, though a handful of local programs do allow co-ops.
Many programs also set a maximum purchase price pegged to the local market and a limit on how much cash you can have in the bank. The purchase price cap keeps grant funds out of luxury purchases. The asset cap keeps the money going to buyers who genuinely lack the savings to cover a down payment themselves.
What Happens If You Sell or Move Out Early
Most first-generation grants come with a lien recorded against your property. That lien enforces the occupancy requirement. If you sell, refinance into a non-qualifying loan, or stop living in the home before the forgiveness period ends, you’ll owe back some or all of the assistance.
Under a five-year, 20-percent-per-year schedule, selling after three years means repaying the remaining 40 percent of the original grant. A cliff structure works differently: leave one month before the ten-year mark and the entire amount is due. The lien shows up on your settlement statement as a subordinate or second lien and stays on title searches through the forgiveness period. County recording fees for filing the lien generally run between $10 and $80.
Documents and the Education Course You’ll Need
Plan on providing your two most recent years of federal tax returns with all schedules, W-2s or 1099s, and pay documentation dated within 60 days of application. Programs use your adjusted gross income, shown on line 11 of Form 1040, to check you against the income cap.5Internal Revenue Service. Adjusted Gross Income Household size matters because it determines which income limit applies, so report everyone actually living in the home.
Almost every down payment assistance program also requires a homebuyer education course through a HUD-approved counseling agency before closing. The course covers mortgages, budgeting, insurance, and property maintenance. Many HUD-approved agencies offer it free or at low cost. To find one, call HUD’s counseling hotline at 800-569-4287 or search HUD’s online counselor directory. Your certificate of completion goes into your loan file.
How the Application Actually Works
You don’t apply for the grant directly. You apply through a mortgage lender that participates in the specific program, and the lender runs the grant paperwork alongside your loan file.
The usual sequence:
- Get pre-approved with a participating lender.
- Complete the homebuyer education course.
- Find a home and sign a purchase contract.
- The lender submits the grant package with your loan file to the housing agency.
- The agency reviews for compliance and issues a commitment letter to the lender and title company.
- At closing, the grant is applied as a credit toward your down payment, closing costs, or both.
Programs that run in funding rounds can close when the round is exhausted, so timing counts. Incomplete documentation is the most common cause of delay, which is worth avoiding when funds are first-come, first-served.
Where To Find Programs You Can Actually Apply To
Three places will surface the grants available to you right now.
Start with your state housing finance agency’s website. Every state has one, and most publish a current list of down payment assistance programs with eligibility details and participating lender directories. Then ask a mortgage lender directly, especially one that already works in first-time buyer lending; participating lenders know which programs are funded and open. Finally, contact a HUD-approved housing counseling agency. Counselors track local, state, and federal programs and can match you against your income, location, and family history.
Availability shifts constantly. Programs run out of money, new rounds open, and rules change. If nothing first-generation-specific is open in your area, broader first-time buyer assistance is worth checking, because you’ll usually qualify for those too.
Will You Owe Taxes on the Grant?
Down payment assistance is generally not included in your gross income for federal tax purposes, so you won’t owe income tax on the grant.6Internal Revenue Service. Down Payment Assistance Programs Assistance Generally Not Included in Homebuyers Income One exception: if the assistance is funded by the home seller, the IRS treats it as a rebate on the purchase price, and you have to reduce your home’s cost basis by the amount received. That could raise your taxable gain when you eventually sell, though the primary residence capital gains exclusion ($250,000 single, $500,000 married filing jointly) shields most sellers from owing anything.