First-Time Homebuyer Grants 2026: Down Payment Assistance and Federal Programs

HUD HOME Investment Partnerships: Down Payment for Buyers

HUD's HOME Investment Partnerships Program allocates approximately $1.5 billion annually to states and local governments, which can use the funds for homebuyer assistance including down payment and closing cost assistance. Participating jurisdictions design their own programs, setting income limits (generally at or below 80% of area median income), maximum purchase prices, required homebuyer education, and repayment terms. Many jurisdictions structure HOME-funded down payment assistance as deferred, forgivable loans — meaning the amount is forgiven after the buyer occupies the home for a specified period, typically 5 to 10 years, without having to repay anything.

To find HOME-funded homebuyer programs in your area, contact your city or county Community Development department, or your state housing finance agency. HUD's website provides a list of all HOME Participating Jurisdictions by state. Many jurisdictions partner with HUD-approved housing counseling agencies to deliver homebuyer education courses, which are typically required before receiving HOME-funded assistance. Completing a HUD-approved homebuyer education course is good practice regardless, as it significantly improves financial readiness and familiarizes buyers with the homebuying process.

State Housing Finance Agency Down Payment Programs

Every state has a Housing Finance Agency (HFA) that issues tax-exempt mortgage revenue bonds to fund below-market-rate mortgage programs for first-time and income-qualified homebuyers. These programs typically offer 30-year fixed-rate mortgages at interest rates below the conventional market rate, often paired with down payment assistance grants or second mortgage loans. The down payment assistance can range from $2,500 to over $15,000 depending on the state and program.

Some of the most active state HFA programs in 2026 include:

• California Housing Finance Agency (CalHFA): The MyHome Assistance Program provides up to 3.5% of the purchase price or appraised value as a deferred-payment junior loan. The CalHFA Dream For All program (when funded) offers shared appreciation loans covering up to 20% of the purchase price.
• Texas State Affordable Housing Corporation (TSAHC): Provides down payment assistance of 3–5% as a forgivable grant (no repayment required) or as a second lien for income-qualified buyers statewide.
• Ohio Housing Finance Agency (OHFA): The Your Choice! Down Payment Assistance program offers 2.5% or 5% of the home's purchase price as forgivable assistance after 7 years.
• Florida Housing Finance Corporation: Florida Assist provides up to $10,000 as a 0% interest, non-amortizing second mortgage for down payment and closing costs.

To access HFA programs, buyers must work with an HFA-approved lender. A list of participating lenders is available on each state HFA's website. Income and purchase price limits apply, and buyers must typically complete an approved homebuyer education course.

USDA Rural Housing Loans: Zero Down Payment for Rural Buyers

The USDA Single Family Housing Guaranteed Loan Program (Section 502 Guaranteed) is one of the best-kept secrets in homeownership assistance. For buyers purchasing in eligible rural and suburban areas, USDA loans require no down payment whatsoever. The loan is made by an approved private lender and guaranteed by USDA, allowing lenders to offer favorable terms without the risk of a large down payment. Buyers must meet income limits (generally up to 115% of area median income) and the property must be in an eligible area as defined by USDA Rural Development's eligibility map.

USDA also offers the Section 502 Direct Loan Program for very low and low-income buyers, with income limits typically at 80% of area median income. Direct loans offer even lower interest rates and payment assistance to further reduce monthly payments. These are actual government loans made directly by USDA, not guaranteed loans. Applications for direct loans are submitted to the local USDA Rural Development office. Both USDA loan programs allow the purchase of modest, decent, safe, and sanitary housing in eligible areas. Buyers should check eligibility at eligibility.sc.egov.usda.gov before beginning the process.

FHA Loans and Other Federal Mortgage Programs

FHA-insured mortgages through the Federal Housing Administration require only a 3.5% down payment for buyers with credit scores of 580 or higher (10% for scores 500–579). While FHA loans are not grants, the low down payment requirement and flexible qualification standards make homeownership accessible to buyers who cannot afford a conventional 20% down payment. FHA loans can be paired with state HFA down payment assistance to reduce or eliminate the required out-of-pocket contribution entirely.

VA loans, guaranteed by the Department of Veterans Affairs, provide eligible veterans, service members, and surviving spouses with zero-down-payment mortgages and no private mortgage insurance requirement. This is one of the most valuable homeownership benefits available to those who qualify. The VA funding fee (which can be financed into the loan) partially offsets the program's cost to taxpayers. Native American Direct Loans (NADL) through the VA provide direct financing to eligible Native American veterans for home purchase or construction on federal trust land. The Good Neighbor Next Door program, a HUD initiative, offers law enforcement officers, firefighters, emergency medical technicians, and teachers a 50% discount on the list price of HUD-owned homes in revitalization areas in exchange for a three-year occupancy commitment.