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- The Downpayment Toward Equity Act is a proposed bill that would grant up to $25,000 to first-generation first-time homebuyers in the U.S. who meet certain eligibility standards.
- The grant funds could be put toward various homebuying expenses, including the down payment, closing costs or a mortgage interest rate buydown.
- The bill has not yet passed, and there is currently no indication when or if it will. A version of it is included in President Biden's proposed budget for fiscal year 2024.
What is the Downpayment Toward Equity Act?
The Downpayment Toward Equity Act — also known as the $25,000 First-Time Home Buyer Grant or the Downpayment Toward Equity Act of 2023 — is a proposed bill that would give eligible first-generation first-time homebuyers in the U.S. up to $25,000 to put toward the purchase of a home. The funds could be used for costs such as the down payment, mortgage closing costs or a lower mortgage rate.
The bill allows for grants to any eligible first-generation, first-time homebuyer, but is particularly aimed at helping “socially and economically disadvantaged homebuyers,” including Black, Hispanic, Native American and Asian American buyers.
The bill would authorize the U.S. Department of Housing and Urban Development (HUD) to oversee the program, which would be administered at the state level and by some community-based organizations. It calls for $100 billion in funding.
What is the status of the $25,000 down payment grant?
Who is eligible for a $25,000 grant?
If passed, the Downpayment Toward Equity Act would be available to eligible first-generation, first-time homebuyers. The eligibility requirements include:
- First-time homebuyer status: You can’t have owned a home or co-signed a mortgage in the past three years.
- First-generation homebuyer status: Your parents, legal guardians, spouse or domestic partner can’t have owned a home in the past three years. If you were placed in foster care and your income falls within the program’s limits (below), you’d also be considered a first-generation homebuyer.
- Income limits: Your income can’t equal more than 120 percent of the median income in the area in which you’re buying the home or the area in which you currently live. In higher-cost areas (determined by HUD), that limit would be higher.
- Mortgage type: You can use the funds if getting a conventional loan backed by Fannie Mae or Freddie Mac, an FHA loan, VA loan, USDA loan, Section 184 loan or any other loan considered a qualified mortgage.
- Property type: You can use the funds if you’re buying a single-family detached home, condo, co-op or manufactured home, as well as a multifamily home up to four units, so long as you’re living in one of those units.
- Homebuyer education: You’ll need to participate in a HUD-approved housing counseling program (or a homebuyer education course if counseling isn’t available in the time frame you’re buying the home).
Importantly, you’ll also need to live in the home you bought (with the help of the grant) for at least five years. Otherwise, you might need to repay some or all of the funds, depending on how soon you move out.
Are there other versions of this bill?
The Downpayment Toward Equity Act of 2023 (H.R. 4231) is the latest iteration of a bill proposing a $25,000 homebuyer grant. The bill was first introduced in July 2021 as the Downpayment Toward Equity Act of 2021 (H.R. 4495). It regained momentum in March 2023 when it was included in President Biden’s 2024 budget proposal.
In addition to the Downpayment Toward Equity Act, there are other proposed bills focused on helping homebuyers, including the:
- First Time Homebuyer Act (H.R. 2863): This proposed bill would give first-time homebuyers a $15,000 federal tax credit.
- DASH Act (S. 680): The DASH (Decent, Affordable, Safe Housing for All) Act would give first-time homebuyers a $15,000 tax credit, among other provisions.
- HELPER Act (H.R. 3172): The HELPER (Homes for Every Local Protector, Educator, and Responder) Act would amend the FHA mortgage insurance program to give eligible first responders, law enforcement officers and teachers access to no-down payment loans.
Not at this time. The Downpayment Toward Equity Act of 2023, which would give eligible first-generation, first-time homebuyers a grant of up to $25,000, has not passed as of this writing.
The Downpayment Toward Equity Act of 2023 is sponsored by Rep. Maxine Waters (D-Calif.).
There is currently no indication when or if the Downpayment Toward Equity Act of 2023 will pass.