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Understanding the $25,000 Down Payment Toward Equity Act: Expert Guide

New home buyers in Florida may be eligible to receive a cash grant of $25,000 through the Down Payment Toward Equity Act.

This program fulfills a campaign promise made by the Biden administration to provide down payment assistance for high-quality housing to Americans.

The cash grant program was initially introduced in 2021 and has been reaffirmed in President Biden's 2024 Fiscal Year budget proposal.

In this article, we provide a simplified overview of the program, including information on eligibility for first-time buyers, the process for claiming the grant, and when the program is expected to be available.

What Is The Program’s Current Status?

As of March, 2023, the Down Payment Toward Equity Act that would provide a $25,000 grant for first-time home buyers is still in the legislative process and has not yet been passed into law.

This means that the grant is not currently available for home buyers in Florida or any other state. The bill is being considered by Congress and is subject to debate, negotiation, and potential changes before it can be approved and signed into law by the President.

Representative Maxine Waters is the author of the House version of the Downpayment Toward Equity Act, which currently has the support of 64 co-sponsors. Senator Raphael Warnock authored the Senate version of the bill, which has six co-sponsors.

The timeline of the bill is as follows - On July 17, 2021, H.R. 4495 was introduced as the Downpayment Toward Equity Act of 2021 in the House of Representatives. On September 30, 2021, S. 2920 was introduced as the Senate version of the bill.

On February 10, 2022, hearings were held in the Senate to discuss the proposed legislation, and on June 22, 2022, further hearings were conducted in the Senate.

The most recent development occurred on March 9, 2023, when the White House proposed its budget for the fiscal year 2024, allocating $175 billion for affordable housing programs, including $10 billion for cash grants for first-time home buyers.

What is the Down Payment Toward Equity Act?

The Down Payment Toward Equity Act aims to provide financial assistance to eligible first-time home buyers in Florida and other states.

Under this program, qualified buyers may receive up to $25,000 in cash to cover various home purchase expenses, including down payment, closing costs, interest rate reductions via discount points, and other related costs.

As of March 28, 2023, the program sets several requirements for home buyers to be eligible for the grant. To qualify, home buyers must be purchasing a primary residence, using a government-backed mortgage, and earning a low- or moderate-income that is consistent with their area.

Additionally, the program is intended to assist individuals who have faced significant barriers to homeownership. Specifically, eligible home buyers must be first-time homebuyers, first-generation homebuyers, or have parents or legal guardians who defaulted on a home loan or lived in foster care during their lifetime.

It's important to note that the grant cannot be used to purchase a second home or rental property, and all home buyers within the household must meet the program's eligibility requirements.

This means that even if one member of a household is ineligible for the grant, the entire household may not be able to receive the funds.

While the Down Payment Toward Equity Act remains a bill as of March 28, 2023, it represents a potentially significant opportunity for eligible first-time home buyers in Florida and across the country to receive financial assistance and achieve their dream of homeownership.

Why Is The $25,000 Grant Important for First-Time Home Buyers?

The Down Payment Toward Equity Act is designed to help eligible first-time home buyers achieve the goal of homeownership and take steps to increase their household wealth.

By providing financial assistance to cover various home purchase expenses, the program seeks to remove barriers that may prevent some individuals from becoming homeowners, including the high costs associated with down payments, closing costs, and other related expenses.

The Downpayment Toward Equity Act not only helps first-time home buyers purchase homes, but it also aims to reduce racial disparities in homeownership. With real estate being the largest source of wealth in the United States, it is concerning that homeownership is predominantly held by white households.

Currently, the gap between white and Hispanic households' homeownership rate is 25 percentage points, and the difference between white and black households is even greater at 30 percentage points. This disparity is unacceptable and requires immediate attention.

The Down Payment Toward Equity Act is a powerful piece of housing legislation that seeks to level the playing field for disadvantaged groups. This program provides financial assistance to eligible first-time home buyers, making it more affordable for them to purchase homes and incentivizing long-term homeownership.

By increasing access to affordable housing, the program can help reduce the racial disparity in homeownership and promote more diverse and inclusive communities in Florida.

The Down Payment Toward Equity Act is the most significant piece of housing legislation since 1968's Fair Housing Act and Housing & Urban Development Act, and its implementation can have a significant impact on the future of housing equity in the state.

Down Payment Assistance phrase written on notebook

Who Is Eligible For The Down Payment Toward Equity Act?

As of March 28, 2023, the Down Payment Toward Equity Act has not yet been passed into law. Therefore, when discussing the eligibility requirements for the $25,000 grant, it is essential to note that the language of the bill may change before its passage.

If the bill becomes law, eligible home buyers must meet all of the following requirements as of March 28, 2023:

First-time home buyer status is a requirement

To qualify for the Down Payment Toward Equity Act's $25,000 grant, eligible home buyers must not have owned a home or co-signed on a mortgage loan in the past thirty-six months.

However, renters who previously owned homes more than three years ago are considered first-time home buyers and may be eligible for the program.

Eligibility requires being a first-generation home buyer or having a background of living in foster care

For eligible home buyers to qualify for the Down Payment Toward Equity Act's $25,000 grant, their parents or legal guardians must not have owned a home during the home buyer's lifetime, except in cases where the home was lost due to foreclosure or short sale, and the parents or legal guardians do not currently own a home.

However, this requirement is waived for all home buyers who previously lived in foster care.

Individuals who fall under the highest-income bracket are ineligible

To be eligible for the Down Payment Toward Equity Act's $25,000 grant, home buyers must earn an income that's no more than 20 percent over the median income for their metropolitan area.

For instance, in Portland, Maine, where the median income is $60,000, home buyers must earn $72,000 per year or less to qualify for the grant.

However, exceptions to this income requirement are made in high-cost areas such as New York, Los Angeles, and other cities with high living costs. In these areas, eligible home buyers must earn an income that's no more than 80 percent above the local median income.

For example, in San Francisco, eligible home buyers must earn $189,000 or less annually to be eligible for the grant.

The use of a mortgage backed by Fannie Mae, Freddie Mac, FHA, VA, or USDA is required

To qualify for the program, eligible home buyers must use a mortgage that's supported by one of the five government mortgage agencies - Fannie Mae, Freddie Mac, FHA, VA, or USDA.

These entities offer different down payment options, such as no down payment (USDA and VA), 3 percent down payment (Fannie Mae and Freddie Mac), and 3.5 percent down payment (FHA).

However, jumbo mortgages and other non-qualifying mortgage loans are not eligible for the program.

Completion of an online or in-person homeownership course is required

Home buyers who wish to participate in the Down Payment Toward Equity Act must complete a government-approved course on homeownership education.

The courses, which can be completed in as little as 90 minutes, have been shown to decrease the incidence of mortgage defaults.

How Does the Down Payment Toward Equity Act Work?

The Down Payment Toward Equity Act of 2021 is a non-repayable cash grant specifically designed for first-time home buyers. Unlike loans or tax credits, the program provides eligible buyers with a cash payment at closing to help cover down payment and other home purchase expenses.

The standard cash grant amount for first-time home buyers is $20,000, with an additional $5,000 available to those who qualify as a "socially disadvantaged individual."

This includes individuals who identify as Black, Hispanic, Asian American, Native American, or any combination thereof, as well as those who have experienced discrimination or cultural bias due to their group identity, regardless of their individual characteristics.

Qualified buyers have the freedom to allocate the Down Payment Toward Equity Act cash grant to any expenses related to their home purchase. The $25,000 grant can be divided into multiple purposes such as a down payment, lump sum for closing costs, and cash to lower the mortgage interest rate.

For example, $20,000 could be used for the down payment, $3,000 for real estate and title closing costs, and $2,000 for mortgage discount points. Furthermore, the grant can also be used to cover the cost of renovations to improve accessibility to the purchased property.

What Happens If You Move After Receiving Down Payment Assistance?

The Down Payment Toward Equity Act encourages home buyers to take a long-term approach to homeownership. In order to qualify for the grant, homeowners are required to reside in their homes for five years.

If they sell or move before the end of this period, a portion of their initial cash grant will be forfeited. The repayment amount varies based on the year the homeowner moves or sells the property, as follows:

  • Year 1 - Repay 100% or $25,000
  • Year 2 - Repay 80% or $20,000
  • Year 3 - Repay 60% or $15,000
  • Year 4 - Repay 40% or $10,000
  • Year 5 - Repay 20% or $5,000

Exceptions to this rule apply for individuals facing hardships or military deployment. Your mortgage lender can provide further information on these options. Additionally, the program allows the cash grant to be used for making accessibility renovations to the home.

How To Qualify for a $25,000 Down Payment Grant

Once the Down Payment Toward Equity Act is enacted, eligible home buyers will receive the cash grant as an automatic payment sent to their settlement or escrow account.

Your mortgage lender will assist you with the grant process and help you complete the necessary forms. The cash grant will be available to you on the day of closing.

However, if you require the cash grant immediately and the passage of the Down Payment Toward Equity Act is taking too long, you can explore other first-time homebuyer down payment assistance programs.

These programs may include local tax incentives and low-interest, low-down payment mortgages.

Can the Down Payment Towards Equity Act Pass as Legislation?

It is unlikely that the Down Payment Toward Equity Act will become law before the summer of 2023. The process of getting cash grants to home buyers requires coordination among several government agencies, and the budget has not yet been passed.

In addition, Congress needs to establish guidelines for how the federal government distributes grants to states and how states transfer funds to local title companies before cash grants can be issued.

Although versions of the bill were introduced in the House and Senate during the previous congressional session, neither has been reintroduced in the current session.

Common Questions of First-Time Home Buyers Regarding the $25,000 Grant

Learn about the most asked questions from our readers below:

Is the $25,000 First-Time Home Buyer Grant the same thing as the $15,000 Biden First-Time Home Buyer Tax Credit?

The $25,000 First-Time Home Buyer Grant is not equivalent to the $15,000 Biden First-Time Home Buyer Tax Credit.

The Biden tax credit was initially proposed during the presidential campaign and later formed into a bill known as The First-Time Homebuyer Act of 2021. This legislation provides a $15,000 tax credit to first-time home buyers that can be claimed on their tax returns.

On the other hand, the $25,000 grant is a cash payment awarded to eligible first-time home buyers at closing and is not related to tax credits.

Is the $25,000 Home Buyer Grant passed?

At present, the $25,000 first-time home buyer grant program has not been enacted into law.

According to, it is anticipated that the legislation will be approved in some capacity before the conclusion of 2023.

It is important to note that the grant will not be applied retroactively. If you want to remain informed regarding the status of the bill, you can initiate the process of obtaining a mortgage pre-approval.

How do I apply for the $25,000 Home Buyer Grant?

Once the $25,000 Down Payment Towards Equity Act passes, there will be no need for you to submit a separate application for the grant.

Instead, your mortgage lender will utilize the details provided in your loan application to file your request and initiate the disbursement process. The grant will be available to you at your closing.

If I have to move for work during the first five years, do I have to repay the $25,000 grant?

If you decide to move or sell your home within the first five years of using the Down Payment Toward Equity Act program, you will be required to repay a portion of the grant.

The amount you need to pay back depends on the year you sell or move out of your home, ranging from 100% or $25,000 in year 1 to 20% or $5,000 in year 5.

However, there are exceptions to the repayment rule for certain circumstances, such as military deployment or hardship. In the case of moving for work, your employer may reimburse you as part of your moving expense.

Are there restrictions on how I use my first-time home buyer grant money?

There are no restrictions on how you can use the first-time home buyer grant money.

You are free to use the funds for various home purchase-related expenses, including making a down payment on your home, paying for closing costs, buying mortgage discount points, or reducing your mortgage interest rate.

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