If you are renting and assuming you need 20 percent down before you can buy a house, you may be leaving money on the table.
A patchwork of state and local programs exists specifically to hand first-time buyers cash for a down payment and closing costs, and a large share of it goes unused every year.
The catch is that almost nobody explains how these programs actually work, so eligible buyers never apply.
Start with the biggest source: state housing finance agencies.
Nearly every state runs its own first-time buyer program, usually offering a below-market mortgage rate, a down payment grant, or a deferred second loan that you don't repay until you sell or refinance.
Some of these down payment loans are forgivable after a set number of years if you stay in the home.
The money often comes as a silent second mortgage.
You borrow, say, 3 to 5 percent of the purchase price to cover your down payment and closing costs.
In many cases, that loan carries no monthly payment and zero interest.
It just sits there until you sell, at which point it gets paid off from your proceeds.
Who qualifies? "First-time buyer" is looser than it sounds.
Many programs define it as anyone who hasn't owned a home in the past three years.
Some allow repeat buyers in certain target neighborhoods.
Income limits apply, and they vary wildly by county, so a household earning a solid middle-class salary may still fit under the cap in an expensive metro.
There are also federal options layered on top.
FHA loans allow down payments as low as 3.5 percent, and conventional loans backed by Fannie Mae and Freddie Mac can go as low as 3 percent for qualified buyers.
USDA loans cover many rural and suburban areas with zero down.
VA loans offer zero down for eligible service members and veterans.
Search your state's housing finance agency website first.
Then check with your city or county, which often stacks its own grants on top of the state program.
A HUD-approved housing counselor can walk you through the stack for free, and most programs require you to complete a short homebuyer education course anyway.
One warning worth repeating: these programs are not scams, but scammers impersonate them.
Legitimate programs never ask for an upfront fee by gift card, wire, or payment app to "hold" your funds.
If someone pressures you to pay to claim a grant, walk away and call the agency directly.
Program loans sometimes come with a slightly higher interest rate than the absolute best market rate, and some carry recapture rules that claw back the assistance if you sell too soon.
Read the fine print on the second loan, not just the first.
Inventory is still tight in many markets, and rates have made monthly payments sting.
A down payment grant doesn't fix an expensive mortgage, but it can be the difference between renting another year and finally owning.
Our take: the biggest barrier for most renters isn't eligibility, it's awareness.
A free call to a housing counselor costs you nothing and could surface thousands of dollars you didn't know was reserved for you.
Final Thoughts
Do that before you assume you can't afford to buy.