Down payment assistance programs and first-time buyer grants, and why the answer is always a local one

Down payment assistance is money toward the cash you need at closing, and it comes from a state housing finance agency, a city or county housing department, or a lender or employer program, never from a single national office you apply to. Federal law supplies most of the money and sets the outer limits on who may receive it. A state or local agency writes the actual program, sets the amount, and decides what happens if you move. That is why two honest pages about "grants" can contradict each other: they are describing different programs in different places.

Quick answers

There is no national down payment assistance program. The two federal pipelines both hand the money to somebody local. HOME Investment Partnerships funds go to a participating jurisdiction, which 24 CFR 92.2 defines as a State or a unit of general local government designated by HUD. Mortgage revenue bonds are issued by state and local issuers under 26 U.S.C. 143. Neither one is an application you file with the federal government.
"Grant" is used loosely, and the difference is expensive. A true grant is never repaid. Most of what is marketed as a grant is a second lien that is forgiven over time, and selling or refinancing before the clock runs out can make the unforgiven part due at closing.
Two funding sources, two different caps. Bond-funded assistance runs on income no more than 115 percent of the applicable median family income (143(f)(1)). HOME-funded assistance runs on a low-income test, which 24 CFR 92.2 sets at 80 percent of the area median as HUD determines it. A page that states one ceiling as the rule is describing half the market.
The occupancy clock is the term that catches people. Under HOME, the home must stay your principal residence for a minimum period set by how much assistance you took: five years under $25,000 of HOME funds, ten years from $25,000 to $50,000, and fifteen years above that (24 CFR 92.254(a)(4), Table 1). Bond programs run their own clock, nine years, under a different mechanism.

BEDRWay is not a lender or a mortgage broker. We are not licensed to originate mortgages in any state, we set no rates and quote none, and nothing here is an offer of credit or a statement about any decision an agency or a lender will make on your file. We introduce you to one licensed loan officer who works where you live.

Reviewed by the BEDRWay editorial team. Last reviewed 21 September 2026. The federal regulations below were read from the eCFR API on 21 September 2026; the statutory tests were read from the Government Publishing Office's United States Code the same day.

Why there is no national program, and what that changes

The federal government funds down payment assistance and writes the rules it has to obey. It does not run a program a buyer applies to. Both of the large pipelines end at a local desk.

HOME Investment Partnerships. HUD allocates the money to participating jurisdictions. 24 CFR 92.2 defines a jurisdiction as a State or a unit of general local government, and a participating jurisdiction as one HUD has designated under 92.105. That jurisdiction then designs the assistance and, under 92.254(a)(5), must establish its own resale or recapture terms and get HUD to approve them in writing.
Mortgage revenue bonds. A state or local issuer sells tax-exempt bonds and lends the proceeds. 26 U.S.C. 143 sets who may borrow and at what ceilings, and the housing finance agency fills in everything else.

Three practical consequences follow. First, eligibility is decided by geography before it is decided by anything about you, because the caps are area figures and the program only exists where an agency chose to run one. Second, there is no central list that is both complete and current, which is why national aggregator sites and national brands rank for these queries while the actual terms sit on an agency page. Third, the person who can confirm what you can use is a loan officer approved by that agency, not a national call center.

A grant, a forgivable second, a deferred second and a repayable second

These four words are used interchangeably in marketing and they are four different products. What separates them is not what happens at the closing table, where they all look like money arriving. It is what happens the day you sell, refinance or move out.

Shape	What it is	What happens if you sell, refinance or move out early
Grant	Money that is never repaid, with no lien recorded for it	Nothing. This is the only one of the four with no exit condition, and it is the rarest and usually the smallest
Forgivable second mortgage	A recorded lien, often with no monthly obligation, written off on a schedule	The unforgiven balance is generally due at closing. Read whether forgiveness accrues month by month or lands in one piece at the end, because the two behave completely differently in year three
Deferred second mortgage	A real debt with nothing due each month and no forgiveness at all	The full amount comes due when the home is sold or refinanced, or when the first loan is paid off. Waiting does not shrink it
Repayable second mortgage	A real debt that amortizes from the first month, like any second lien	The remaining balance is due at sale. It also sits in your debt-to-income ratio from day one, which can move what the first lender will lend

A refinance is the exit people forget. A second lien does not politely step aside because you found a better first mortgage. Either the agency agrees to subordinate it, which is a request with its own form, its own fee and its own possibility of a no, or the assistance has to be paid off out of the new loan. Ask about subordination before you accept assistance, not in the year you want to refinance.

Mortgage credit certificates are a fifth thing that often sits on the same application and is not assistance with the cash at closing at all. An MCC is an annual federal income tax credit on part of the interest you pay, claimed every year on your return. The first-time buyer hub covers how the federal frame treats them, which is the same way it treats a bond loan.

What eligibility is almost always built from

Program pages look wildly different and are assembled from the same five parts. Reading a new program is mostly a matter of finding each part and writing down its number.

An income cap. Nearly always a household figure rather than a borrower figure, and frequently counting people who will sign the deed of trust without being on the loan. It varies by county and usually by household size.
A purchase price cap. Bond programs cap the acquisition cost at 90 percent of the average area purchase price, and 110 percent in a targeted area (143(e)(1) and (e)(5)). HOME-assisted purchases use a different yardstick, 95 percent of the area median purchase price under 24 CFR 92.254(a)(2). Both are area figures, so the cap moves across a county line.
An occupancy requirement. The home has to be your principal residence, and for a defined period rather than at closing only. Under HOME the housing must be the principal residence of the family throughout the affordability period set by 92.254(a)(4). Buying with the intention of renting it out is the fastest way to owe the money back.
A buyer education requirement. Usually a course with a certificate, taken before you go under contract rather than after. For HOME-assisted purchases it is in the regulation itself: 24 CFR 92.254(a)(3) states that the homebuyer must receive housing counseling.
A first-time buyer definition that is not literal. It normally means no present ownership interest in a principal residence during the three years ending on the day the mortgage is executed, which is the bond test at 26 U.S.C. 143(d)(1). Having owned before is not a permanent bar. Some programs waive the test entirely for targeted areas, for veterans, or because they are not bond-funded and were never subject to it.

A credit score floor and an approved-lender requirement usually sit alongside these, and neither is set by us. Agencies also commonly run more than one program at a time, with different caps, so being outside one does not tell you anything about the next one.

Recapture, and the two different things that word means

Assistance can follow you out of the house, and the sector uses one word for two unrelated mechanisms. Confusing them is common even on agency-adjacent pages.

Bond recapture is a federal tax. Dispose of a home financed with a federally subsidized bond loan or an MCC too soon and your federal tax for that year can be increased. It is capped at 50 percent of the gain, and it runs for nine years (143(m)). No gain means nothing to recapture, and the mechanics are set out on the first-time buyer hub. Whether it reaches you is a question for a tax professional with your file in front of them.
HOME recapture is the jurisdiction taking its money back. It is not a tax. Under 24 CFR 92.254(a)(5)(ii) the jurisdiction must recoup all or part of the assistance if the home stops being the family's principal residence during the affordability period, and it may reduce the amount pro rata for the time you lived there. One limit is worth knowing before you sign anything: where a sale triggers the requirement, the regulation states that the amount recaptured cannot exceed the net proceeds, which it defines as the sales price minus repayment of superior loans and closing costs.

The two can apply to the same purchase, because a bond first mortgage and a locally funded second are a normal pairing. They are separate obligations with separate clocks, and a program summary that mentions only one is not telling you the whole term.

Five questions to ask before you accept assistance

Is this a grant, or a lien? If it is a lien, is it forgivable, deferred, or repayable from month one?
How long is the clock, when does it start, and does forgiveness accrue gradually or all at the end?
Will the agency subordinate this lien if I refinance later, and what does that cost?
Which income figure is tested, whose income counts, and does household size move the cap?
Is this bond-funded, and if it is, does the nine-year federal recapture rule apply to me?

Get the answers from the administering agency or a lender it has approved, in writing, before you are under contract. The terms are on the note and the subordinate mortgage you sign, and those documents govern whatever a brochure said.

The states we cover

We publish state pages one at a time rather than generating fifty, because a program page that is confidently out of date is worse than one that does not exist. Each page names the housing finance agency, the products it runs, what each is worth, who it is for, and which of them have closed, with a publisher and a read date on every figure.

If your state is not one of the three, the route is the same everywhere: find your state housing finance agency, then check whether your city or county runs anything of its own, since local programs are frequently larger than the state one and are the ones aggregator sites miss. The first-time buyer hub explains the federal tests every bond-funded program is built on, and the home loans page covers the minimum down payment on the first mortgage the assistance sits on top of.

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