In addition to Joe Biden’s proposed First-Time Homebuyer Tax Credit, he introduced the Downpayment Toward Equity Act of 2021. This is another attempt at his promise to help Americans buy quality housing through financial assistance. While this bill is not passed yet, and not final, here is what we know according to the National Council of State Housing Agencies.


Again, Joe Biden promised American’s quality housing options through financial assistance in his presidential campaign. The Downpayment Toward Equity Act is a direct endeavor to lessen racial inequality and increase generational wealth in the journey to homeownership.


The current eligibility standards are as follows:

  1. You must be a first-time homebuyer, defined as someone who has not owned a home in the past three years.
  2. You must also be a first-generation homebuyer, meaning your parents have never owned a home before. Exceptions to this are if your parents lost their home to foreclosure and do not currently own a home OR if you have ever been in foster care.
  3. Have to earn 120% or less of your area median income (180% or less in high-cost areas).
  4. You must use a Freddie Mac or Fannie Mae qualified mortgage backed by the government.
  5. You must be purchasing a primary home, not a second home or vacation property.

To be eligible, as of the current guidelines, you must meet all the requirements. Since the bill is not official, this is subject to change.


If you or someone you know qualifies, you may wonder what exactly the assets of this act are. First and foremost, this program is not a tax credit or a loan. Thus, eligible homebuyers will receive a cash grant that does not have to be repaid if they reside in the home for a minimum of six years. This sounds great, so what else?

The amount that eligible borrowers will receive is a steady $20,000. However, if the buyer is economically or socially underprivileged, or identifying as Black, Hispanic, Asian American, or Native American, they will receive an extra $5,000 to the standard grant.

$20,000 to $25,000 sounds good… but how do you receive this? The grant is very easy on the part of the homebuyer. Your qualified mortgage lender will automatically process this grant at closing, with no work on the part of the buyer.

So far, this grant sounds promising and beneficial. The financial grant can be applied towards the down payment, closing costs, or any home-buying cost under the discretion of the buyer.

Looking Forward

This act could potentially level out the real estate playing field, but do not get too excited quite yet. For this act to be passed, it will have to overcome notable challenges within Congress. As of now, this is all the information circulating around the act and is merely a starting point for discussion. Stay connected with us at Direct Mortgage Loans to be notified of any changes to President Biden’s $20,000 Downpaymet Toward Equity Act.

In the meantime, should you have questions about qualifying, or about other home buying programs that exist today, contact our team using the button below!


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