Biden's $25,000 Down Payment Toward Equity Act Guide

Jun 7th 2024
The $25,000 Downpayment Toward Equity Act promises Americans a $25,000 cash grant for first-time home buyers. Although it was first introduced in Congress in 2021 and reintroduced in the House and Senate in 2023, the bill has not passed into law as of mid-2024. The bill is still pending and its future remains uncertain as it continues to await a vote in Congress.

The Down Payment Toward Equity Act of 2021, otherwise known as the $25,000 First-Time Buyer Home Grant, comes from Biden’s promise to help Americans purchase quality housing. The act is currently in Congress but could be passed any day and would deliver some of the down payment assistance Biden promised home buyers throughout the past year. 

hash-markWhat Is the $25,000 Down Payment Toward Equity Act?

The Down Payment Toward Equity Act is a first-time home buyer grant bill. The program is promoted by president Biden and will give up to $25,000 to those purchasing a home for the first time. This money could go toward various home-buying expenses that would otherwise prohibit a person from buying a property. 

Some of the items the money could be used for include:

  • Closing costs
  • Down payment
  • Interest

These costs can make the buying process harder, but the act will simplify everything.

Not everyone will be eligible for the $25,000 Down Payment Toward Equity Act. There are a few requirements you have to meet if you think you need the $25,000 for your home-buying process. We’ll dive into these next to give you a better understanding of what you need to qualify.

hash-markWho Is Eligible For The Downpayment Toward Equity Act?

The Downpayment Toward Equity Act aims to assist first-time, first-generation homebuyers who meet specific eligibility criteria. The primary requirements for eligibility include:

  1. First-Time Homebuyer: Applicants must not have owned a home or co-signed a mortgage in the past three years.

  2. First-Generation Homebuyer: The eligibility extends to those whose parents or legal guardians have not owned a home in the past three years. 

  3. Income Limits: Applicants must meet income limitations, typically not exceeding 120% of the area median income. Higher-cost areas may have adjusted income limits and must not earn more than 140% of the area median income. 

  4. Primary Residence: The property being purchased must be intended as the primary residence. Second homes and rental properties do not qualify.

  5. Approved Mortgage Types: The grant can be used with government-backed mortgages, including conventional loans, Fannie Mae, Freddie Mac, FHA loans, VA loans, and USDA loans.

  6. Housing Counseling: Eligible applicants must complete a HUD-approved housing counseling program or a homebuyer education course if housing counseling is unavailable in the required timeframe.

  7. Five-Year Residency Requirement: Recipients must live in the home purchased with the grant money for at least five years. Selling or moving out of the home earlier may require repayment of some or all of the funds.


hash-mark$25,000 Homebuyer Grant Requirements

To qualify for the $25,000 grant, you will need to fill out an application and meet the following requirements:

  • Buying a home for the first time
  • Purchasing a primary location of living, rather than a vacation home or other secondary residence
  • A first-generation buyer, someone who came from foster care, or someone who has parents who defaulted on their loan
  • Meeting income limitations in your specific area
  • Using a government-backed mortgage

As long as you meet the above requirements, you will be able to apply for Biden's homebuyer grant through the $25,000 Down Payment Equity Act. 

This grant is critical for first-time homebuyers because it helps renters find a way to purchase a place for themselves. It also seeks to dissolve income and race disparity in homeownership. 

The Down Payment Toward Equity Act seeks to close gaps that have existed in the housing world for a long time. When it comes to fruition, it could help people who never thought they had a chance at purchasing a house for themselves.

hash-mark$25,000 Homebuyer Grant Application Process

  1. Apply for the $25k First-Time Homebuyer Grant
  2. Wait for Your Status to be Reviews
  3. Get Your Funds Approved
  4. $25k Grants are Distributed

1. Apply for the $25k First-Time Homebuyer Grant

If you think you qualify for the $25,000 first-time homebuyer grant, the first step will be to apply for it. You'll need to submit the required information about your financials as well as your background. 

2. Wait for Your Status to Be Reviewed

The documents you've submitted will be reviewed, and your eligibility for the $25,000 first-time homebuyer grant will be confirmed. If you're not eligible or more information is needed, you will be notified. 

3. Get Your Funds Approved

After your information is reviewed, funds will be approved. The awarded funds can change from person to person. Most buyers will receive $25,000 for their home. Those who have been subjected to discrimination based on the color of their skin may be eligible for a bonus of $5,000.

4. $25k Grants are Distributed

Once the individual receives the money, they can use it however they see fit in the buying process. It could go towards the mortgage or the down payment. If awarded the $25,000 grant, you can have leverage on buying a home, which should make the process easier. It’s a unique prospect that will change the way the housing world works forever.

hash-markWhen Can You Get the $25k First-Time Homebuyer Grant? 

As of June 2024, the $25,000 Down Payment Toward Equity Act is still in its first stages of creation. It hasn’t been passed into law yet, so you can’t access the funds or apply for them quite yet. Still, it’s exciting that something this helpful is moving up the ladder in a position of a higher power.

If the act turns into a law, those eligible for the money don’t need to do anything to collect the money they’ve earned. The mortgage lender will receive and apply the money right from the start. You don’t need to worry about complicated paperwork or other issues. All you need to do is participate in a two-hour session with a government-approved counselor.

hash-mark$25k First-Time Homebuyer Grant Rules for Moving

Some limitations come with the $25,000 Down Payment Act of 2021. If you move within the first five years of occupying the home purchased with this assistance, you will need to pay back at least part of the grant. It won’t be the entire amount unless you move within the first year.

Here are some of the specifications for repayment if you move:

  • If you move after one year, pay back $25,000
  • If you move after two years, pay back $20,000
  • If you move after three years, pay back $15,000
  • If you move after four years, pay back $10,000
  • If you move after five years, pay back $5000

The repayments are very cut and dry.

If you receive the grant, it looks like it will be best to ensure you want to stay in this home for five years before taking it. Of course, the act may change as it develops further before turning into a law.

hash-mark$25,000 First Time Homebuyer Program Bottom Line

While the Down Payment Toward Equity Act of 2021 hasn't passed as of mid-2024, the Biden administration still hopes to provide relief that makes homes more affordable. If the $25,000 first-time homebuyer grant makes it into law, it will help many people. All we can do is wait and see if it passes.

Since the $25,000 Down Payment Act isn’t law yet, you might also want to consider other first-time homebuyer programs such as the First Generation Down Payment Assistance. You can get up to $20,000 by meeting the same qualifications. There are only a few differences in qualifications. The buyer’s parents can’t have owned a home, and they cannot currently own a home.