The Down Payment Toward Equity
(coming soon)
First-time home buyers may soon be eligible to receive a $25,000 cash grant to purchase a new home thanks to the Down Payment Toward Equity Act. This grant fulfills a campaign promise from the Biden administration to give Americans down payment assistance for purchasing quality housing. First introduced in 2021, the White House re-affirmed the cash grant program in President Biden’s 2024 Fiscal Year budget proposal.
As of April 19, 2023, the $25,000 first-time home buyer grant remains a bill.
The bill’s timeline is as follows:
- July 17, 2021: H.R. 4495 introduced as Downpayment Toward Equity Act of 2021
- September 30, 2021: S. 2920 introduced as Downpayment Toward Equity Act of 2021
- February 10, 2022: Hearings held in Senate
- June 22, 2022: Hearings held in Senate
- March 9, 2023: White House budget allocates $175 billion for affordable housing programs, including $10 billion for cash grants for first-time home buyers
Grant money for home buyers is unavailable until the bill is passed into law
As of April 19, 2023, the program requires that home buyers be a first-time home buyer and earn a low- or moderate income consistent for their area. They also must buy a home that will be a primary residence and use a government-backed mortgage. The final condition is that they are a first-generation home buyer, have parents or legal guardians who defaulted on a home loan, or lived in foster care during their lifetime
The Downpayment Toward Equity Act may not be used to purchase a second home or rental property, and all home buyers within the household must meet the program’s eligibility requirements.
The Downpayment Toward Equity Act is unlikely to pass into law before the Summer 2023 season because getting cash grants to home buyers requires multiple government agencies to coordinate, and the budget isn’t passed.
Plus, Congress will need to define how the federal government distributes grants to state, and how states move money to local title companies. Those rules are required before cash grants can be made.
There will be no need to apply
In the last congressional session, versions of the Downpayment Toward Equity Act were introduced in the House and the Senate. Neither has been introduced in the new congressional session. If and when it does become a law, you won’t need to apply when the $25,000 Downpayment Towards Equity Act passes. Your mortgage lender will use the information in your loan application to file your request and activate your disbursement. The grant will await you at your closing.
If you’re hoping to purchase a home soon, you may not want to wait for the $25K first-time homebuyer bill to pass into law.There are other federal housing grants and assistance programs available that you may qualify for. FHA loans can be a great option for first-time buyers because of their low down payment requirements. VA loans are also excellent for qualifying individuals as they require no down payment. The Department of Housing and Urban Development offers several programs for first-time buyers, like their Good Neighbor Next Door program. It helps teachers and first responders purchase homes in specific revitalization areas at a 50% discount. Purchasing your first home is a major milestone, and it can take years to achieve on your own. To set yourself up for success, you should explore every possible down payment assistance option that you might qualify for. Federal, state, and local programs aim to help buyers enter the real estate market, which benefits both the individual homeowners and the community as a whole. You can consult with a mortgage expert to learn more about the programs that could help you achieve homeownership.