First-Gen Homebuyers Could Get Up to $20K in Downpayment Aid Under $100 Billion Equity Act

This new legislation, officially called the Downpayment Toward Equity Act of 2025, sets up a massive $100 billion federal grant program aimed squarely at tackling the biggest hurdle to homeownership: the downpayment. The money, which will be available until it’s all spent, gets funneled through states and approved financial institutions to help a specific group of buyers get into their first house.

Essentially, the Secretary of Housing and Urban Development (HUD) will hand out grants to states (75% of the pot) and competitive grants to organizations like community development financial institutions (CDFIs) and nonprofits (the remaining 25%). The goal is to provide qualified buyers with funds for downpayments, closing costs, or even to buy down the interest rate on an eligible mortgage. The maximum assistance a buyer can get is the greater of $20,000 or 10 percent of the home’s purchase price, which is a significant boost for anyone trying to save while rents keep climbing.

Who Qualifies as a 'First-Gen' Buyer?

This program is highly targeted. To be a "Qualified Homebuyer," you have to meet three main criteria, and the last two are the tightest. First, your household income generally can’t exceed 120% of the area’s median income (or 140% in high-cost areas). Second, you must be a first-time homebuyer. Third, and most importantly, you must be a first-generation homebuyer.

Being a first-generation buyer means you (and your spouse/partner) haven't owned a primary residence before. The bill makes a smart clarification here: if you inherited property—like an old family home passed down without a will—that ownership doesn't count against you. This is a huge deal because it targets the generational wealth gap, recognizing that many people are locked out of the market because their parents or grandparents never owned a home to pass down.

For the busy lender or administrator, the bill keeps things moving by letting them rely on the buyer’s sworn statement (attestation) for first-time and first-generation status. This cuts down on paperwork and delays, though it does rely heavily on the buyer’s honesty. If a buyer lies, the administrator is protected from penalties as long as they acted in good faith based on that statement.

The Five-Year Residency Rule: Staying Put

If you get this assistance, you have to commit to the house. The grant money can only be used on a one-to-four-unit residential property that you intend to use as your main home. Crucially, if you move out before five years are up, you generally have to pay back a proportional amount of the assistance.

Think of it as a five-year clock: stay for the full five years, and the money is yours free and clear. If you have to move for a hardship, like a job loss or medical issue, you won’t have to repay the shortage. Also, if you sell the house early but the profit you make is less than the amount you owe back, you are also protected from repayment. This rule incentivizes stability and makes sure the funds are going toward long-term homeownership, not just short-term flipping.

Mandatory Counseling and Accountability

Before you can pocket any grant money, you must complete mandatory homebuyer counseling from a HUD-approved agency. This isn’t just a nice-to-have; it’s required before you sign a sales contract or loan application. The training covers the duties of homeownership and your fair housing rights—a critical step that helps prepare new buyers for the financial realities of owning a home. The bill even sets aside at least 5% of all appropriated funds just to cover the costs of providing this counseling.

To ensure the $100 billion investment actually achieves its equity goals, the Secretary is required to produce highly detailed annual reports for Congress. These reports must break down who is applying for and receiving the aid by race, ethnicity, and gender, down to the ZIP Code or census tract level. This is a powerful accountability measure designed to catch any signs of discrimination or unequal distribution early on, ensuring the money reaches the communities it’s intended to help.

One thing to note on the implementation side: the bill gives the Secretary the power to issue initial rules and procedures immediately via notice or letter, bypassing the usual lengthy formal rulemaking process. While this allows the massive program to start up quickly, it means the public and industry won't have the typical opportunity to weigh in on the initial rules before they take effect.