Own a home but short on cash for the next one?
Think down payment help is only for first-time buyers? It isn't. If selling your home would leave you with little cash, you may still buy your next main home.
The low-equity trap
- Selling a home often costs about 6–8% in commissions, title, taxes and fees. On a $350,000 home that's $21,000–$28,000.
- After paying off your current mortgage, you may walk away with only a few thousand dollars, or just break even.
- Many owners feel stuck because they don't have $15,000–$25,000 saved for the next down payment and closing costs.
Who can use the program
You don't have to be a first-time buyer. The new home must be your main home. Common ways to qualify include:
- 1First-time buyer
- 2Household income at or below 140% of the area's median income
- 3Community or public service work, with no income limit: current, retired or volunteer first responders (police, fire, EMS/ambulance), teachers, healthcare workers, government workers and military
- 4Buying in an underserved area, where the income cap doesn't apply
Plus: aim for a 640+ credit score, use FHA financing, and the 3.5% grant is 100% forgiven at closing, with no second mortgage and no monthly payback.
How the numbers can work
| Cost | Usually needed | How it's covered | Your cash |
|---|---|---|---|
| Down payment | 3.5% on FHA ($12,250 on a $350,000 home) | The 3.5% grant covers it, forgiven at closing | $0 |
| Closing costs & prepaids | About 3–4% ($10,500–$14,000) | Negotiated seller concessions toward actual eligible costs | $0 if the seller agrees |
| Total | About $22,000–$26,000 | Grant + concessions | Can be $0 at closing |
Example only. Seller concessions are negotiated, never guaranteed, and limited by the contract, appraisal, actual eligible costs, lender review and program rules. Unused concessions are not cash back. Earnest money and some up-front fees (like inspection) may be paid early; earnest money counts toward your costs at closing.
One FHA loan at a time
Usually you sell and pay off your current home at or before closing on the new one. There are some exceptions, such as moving more than 50 miles for a job, a growing family, or leaving a home you own with someone else. Your lender confirms which ones apply.
A fresh start after a hard sale
If you sold under pressure, after a divorce, job move or market shift, and your equity went to the payoff and fees, this can be a way back into owning without renting for years to rebuild savings.
Educational only. Not a loan approval, offer of credit, or promise of eligibility.