The "Downpayment Toward Equity Act of 2025" establishes a program through the Department of Housing and Urban Development (HUD) to provide grants for financial assistance to first-generation homebuyers. This initiative aims to address multigenerational inequities in homeownership access and to narrow the racial homeownership gap in the United States. Grants will be distributed to States and eligible entities, including minority depository institutions and community development financial institutions, to help individuals acquire owner-occupied primary residences.

To qualify, a homebuyer must be a first-generation homebuyer, defined as an individual whose parents or guardians did not own a home, or who was in foster or institutional care. They must also be a first-time homebuyer and have a household income not exceeding 120% of the area median income, or 140% in high-cost areas. Eligible homes must be 1-4 dwelling units and serve as the homebuyer's primary residence, with eligibility for these criteria often established through borrower attestation.

The assistance can cover various costs associated with acquiring an eligible home, including downpayment costs, closing costs, and expenses to reduce mortgage interest rates. It also supports subsidies for shared equity homes and pre-occupancy home modifications for individuals with disabilities. The maximum assistance amount is the greater of $20,000 or 10% of the purchase price, with potential increases for socially and economically disadvantaged homebuyers or those in high-cost areas.

Funds are allocated with 75% going to States based on a formula considering potential qualified homebuyers and median home prices, while 25% is competitively awarded to eligible entities. States must administer the program through their housing finance agencies and comply with HUD's regulations for affirmatively furthering fair housing. The Secretary can recapture and reallocate funds if a grantee fails to expend them timely or if distribution disproportionately excludes racial or ethnic groups.

Qualified homebuyers are required to complete a housing counseling program before entering a sales agreement or loan application, with an alternative education option if counseling capacity is limited. If a homebuyer ceases to occupy the home as their primary residence within five years, they may be required to repay a proportional amount of the assistance, with exceptions for shared equity programs or hardship. The bill mandates annual reports on demographics and assistance, requires a "compelling interest study" on historical discrimination, and authorizes $100,000,000,000 for these grants.