Mortgage 101: Grants for First Time Homebuyers

by Emily RicheyMarch 31, 2016

Coming Up With Your First Down Payment


Buying a home is exciting, but like most great thrills in life, you have to pay to play. If you’re just starting the home buying process for the first time then you may be surprised at all the extra expenses that arise during the process. Fortunately, there is assistance out there for first-time homebuyers if you know where to look. Let’s take a look at some of the best sources of money and savings when you’re purchasing your first home.

Feels Like the First Time

Before we get started, let’s talk about what constitutes first-time homebuyer status. The requirements will vary depending on the source, but according to the U.S. Department of Housing and Urban Development, a first-time homebuyer is someone who:

  • Hasn’t owned a primary residence for the past three years
  • Is married to someone who hasn’t owned a home for the past three years
  • Is a single parent or displaced homemaker who has only previously owned a home with a spouse
  • Has only owned a home not attached to a permanent foundation (such as an RV or mobile home)
  • Or, has only owned a property that wasn’t up to code and would’ve cost more to bring up to code than the cost of building a home.

As you can see, there’s more than one way to qualify for first-time homebuyer status, so don’t count yourself out if you don’t meet any of the above criteria. You may still qualify for assistance. (Be warned: Some home buying assistance programs do have expiration dates and may not be available.)

American Dream Down Payment Initiative (ADDI)

American dream


Enacted in 2003, the American Dream Down Payment Initiative (ADDI) provides qualified buyers with funding to assist with down payments, closing costs, and certain rehabilitation projects. The limit for the ADDI program is $10,000 or 6% of the home’s purchase price, whichever is greater. While the initial grant comes from HUD, state and local governments administer ADDI loans so your best starting point is a quick web search for ADDI loans in your area.

Your State Housing Finance Agencies

Every state in the country has a state housing finance agency, or HFA. Again, the Internet is your friend when trying to locate the agency in your state. The type of assistance offered may vary by state, but you may find state bond programs designed to offer low-interest loans, down payment assistance programs, or urban development initiatives that can help you find affordable housing.

Check With Your City

Your local government can be another valuable resource. Again, the specific services will depend on your locale, but some local governments offer homebuyer counseling and education, savings matching programs, or access to affordable mortgages.

FHA Loans

The Federal Housing Administration insures mortgage loans, allowing lenders to finance buyers who might not otherwise qualify. Some loan products require as little 0-3% down payment, removing a major hurdle for cash-strapped buyers.

Home Repair Grants

Couple ready to renovate

A home in need of some TLC can be a good bargain but repairs might end up costing more than you think. Thankfully assistance is available. HUD offers a rehabilitation and repair loan, and you may also be able to find relief in the form of grants from local non-profits.

Time to Buy
As you know, interest rates are about as low as they’re going to get in the foreseeable future, so there’s a strong incentive to purchase a home right now. Don’t let cash flow concerns get in the way of your goals–take advantage of these programs and make the American Dream your reality. is the place to dream and discover your ideal home! Are you starting to get the itch to look for your first or next home, but don’t know where to start? You’ve come to the right place! Browse our real estate and lifestyle blog for home buying tips, mortgage guides, DIY ideas, interior design, lifestyle topics, general home inspiration, or just some homes fun. We are sure you can scratch that itch and find all the information and tools you need to help in your home search. Want to start looking at available real estate right now? Head to our home page and check out homes for sale or rent listings all over the country.
Happy house hunting!

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About The Author
Emily Richey
Emily is a Content Marketing Assistant and a new home owner! When not coordinating content for Homes, she stays busy cooking in her new kitchen, reading interior design magazines, running with her pup and husband, exploring new places, and entertaining.