Down Payment Assistance Programs: How to Get Help Buying Your First Home

The down payment is often the biggest barrier between you and homeownership. According to Down Payment Resource, more than 2,000 down payment assistance programs exist across the United States—yet many homebuyers don't know they qualify. These programs offer grants, forgivable loans, and deferred-payment options that can reduce or eliminate the cash you need upfront. Whether you're a first-time buyer, returning buyer, or working in a qualifying profession, there's likely a program designed to help you. This guide breaks down the types of assistance available, eligibility requirements, and exactly how to find and apply for programs in your area.

What Is Down Payment Assistance?

Down payment assistance (DPA) refers to financial aid programs designed to help homebuyers cover down payment and closing costs. These programs are offered by federal, state, and local governments, nonprofit organizations, and private lenders.

The goal of DPA programs is straightforward: remove financial barriers that prevent qualified buyers from achieving homeownership. For many Americans, saving 3% to 20% of a home's purchase price while paying rent and other expenses feels impossible. DPA programs bridge this gap.

DPA programs vary widely in structure and requirements. Some provide outright grants you never repay. Others offer loans that are forgiven over time or deferred until you sell your home. Understanding these differences is essential for choosing the right program for your situation.

Types of Down Payment Assistance Programs

Down payment assistance comes in several forms, each with distinct repayment terms and conditions. Here's what you need to know about each type:

Grants

Grants provide cash assistance that does not need to be repaid—essentially free money for your down payment or closing costs. Grant programs are typically funded by state housing agencies, local governments, or nonprofit organizations.

However, grants often come with conditions:

• Residency requirements: You may need to stay in the home for a certain period (typically 5 to 10 years)
• Homebuyer education: Many grant programs require completion of a HUD-approved course
• Recapture clauses: If you sell or refinance within the specified period, you may need to repay a portion of the grant

Forgivable Loans

Forgivable loans, sometimes called "soft second" mortgages, function similarly to grants but are structured as loans. The key difference: the loan balance is forgiven over time—typically 5 to 15 years—as long as you continue living in the home.

Common forgiveness structures include:

• Pro-rata forgiveness: 20% of the loan is forgiven each year for five years
• Back-end forgiveness: Full loan forgiven after living in home for set period
• Partial forgiveness: Portion forgiven annually with remainder due at sale

If you sell, refinance, or move before the forgiveness period ends, you'll typically owe some or all of the original loan amount.

Deferred-Payment Loans

With a deferred-payment loan, you borrow money for your down payment but make no monthly payments during the loan term. Repayment is deferred until you:

• Sell the home
• Refinance your mortgage
• Pay off your first mortgage
• Stop occupying the property as your primary residence

These loans often carry zero or low interest, making them an affordable option for buyers who need help now but expect their financial situation to improve over time.

Low-Interest Second Mortgages

Some DPA programs offer second mortgages at below-market interest rates. Unlike forgivable or deferred loans, these require monthly payments. However, the interest rates are typically much lower than conventional second mortgages or personal loans.

Matched Savings Programs (Individual Development Accounts)

Individual Development Accounts (IDAs) are savings programs where your deposits are matched by the program sponsor—often at ratios of 2:1 or 3:1. Once you've saved a designated amount, you can withdraw the total to use toward your home purchase.

IDAs require time and discipline but can significantly multiply your savings. For example, if you save $3,000 and the program matches at 3:1, you'd have $12,000 available for your down payment.

Eligibility Requirements for DPA Programs

Most down payment assistance programs have specific eligibility criteria. While requirements vary by program, here are the common factors:

Income Limits

The majority of DPA programs target low-to-moderate income households. Income limits are typically expressed as a percentage of the Area Median Income (AMI):

Because AMI varies by location, a buyer in San Francisco might qualify with a much higher income than a buyer in rural Kansas. Always check the specific income limits for programs in your area.

First-Time Homebuyer Definition

Many programs require buyers to be "first-time homebuyers," but this definition is more inclusive than you might expect:

• Standard definition: You haven't owned a home in the past three years
• Displaced homemakers: Single parents or displaced homemakers who owned only with a former spouse may qualify
• Veterans: Some programs waive first-time buyer requirements for veterans

Even if you owned a home previously, you might still qualify if three or more years have passed since you held title to a property.

Credit Score Requirements

Credit requirements vary significantly by program:

• Most programs: Require minimum credit scores of 620 to 680
• FHA-compatible programs: May accept scores as low as 580
• Flexible programs: Some offer lower requirements with compensating factors

If your credit score needs improvement, consider reviewing our guide on credit score basics to understand what factors affect your score and how to improve it before applying for a mortgage.

Additional Requirements

Beyond income, buyer status, and credit, many programs require:

• Homebuyer education: Completion of a HUD-approved homeownership course
• Primary residence: The home must be your primary residence, not an investment property
• Purchase price limits: Maximum home prices based on area housing costs
• Geographic restrictions: Some programs are limited to specific cities, counties, or neighborhoods
• Occupancy period: You must intend to occupy the home for a minimum period

Federal Programs That Work with DPA

While the federal government doesn't offer direct down payment assistance grants, several federal mortgage programs facilitate low down payments and work seamlessly with state and local DPA programs.

FHA Loans

The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages with favorable terms:

• Minimum down payment: 3.5% with credit score of 580 or higher
• DPA compatibility: FHA loans can be combined with most assistance programs
• Gift funds: Your entire down payment can come from gifts or assistance programs
• Credit flexibility: More lenient credit requirements than conventional loans

For a comprehensive overview, see our FHA loan guide.

VA Loans

VA loans, guaranteed by the Department of Veterans Affairs, offer exceptional benefits for eligible service members:

• Zero down payment: Required for nearly 90% of VA-backed loans
• No PMI: No private mortgage insurance required
• Eligibility: Veterans, active-duty service members, National Guard, Reserves, and eligible surviving spouses
• DPA compatibility: Can combine with state and local programs for closing costs

According to the VA home loan program, most veterans can purchase a home with no money down. Learn more in our VA loan guide.

USDA Loans

The U.S. Department of Agriculture's Rural Development program offers:

• Zero down payment: For eligible properties in designated rural areas
• Income limits: Must meet USDA income guidelines
• Location requirements: Property must be in eligible rural area
• DPA compatibility: Can combine with other assistance for closing costs

HUD Housing Counseling

HUD provides resources to connect buyers with assistance programs and guidance:

• HUD-approved counselors: Free or low-cost guidance on homebuying
• Program navigation: Help identifying available assistance programs
• Financial coaching: Budgeting and credit improvement assistance
• Contact: Visit HUD.gov or call 1-800-569-4287

State Housing Finance Agency (HFA) Programs

Every state has a Housing Finance Agency (sometimes called Housing Finance Authority or Housing Development Authority) that offers homebuyer assistance programs. State HFA programs are among the most accessible and widely used DPA resources.

What State HFAs Typically Offer

• Down payment assistance: Grants and loans for down payments
• Closing cost assistance: Help with fees and expenses at closing
• Below-market mortgages: First mortgages with competitive interest rates
• Mortgage credit certificates: Federal tax credits for mortgage interest
• Combined programs: Bundled first mortgages with DPA

How State HFA Programs Work

State HFA programs are typically funded through tax-exempt bonds, allowing them to offer below-market interest rates and assistance funds. Key characteristics include:

• Income limits: Based on AMI for your area
• First-time buyer focus: Many programs require first-time buyer status
• Approved lenders: You must work with participating lenders
• Education requirements: Often require homebuyer education course completion

Finding Your State's HFA

The National Council of State Housing Agencies (NCSHA) maintains a directory of all state HFAs. You can search for "[Your State] Housing Finance Agency" or visit your state government's housing website to find available programs.

How to Find Down Payment Assistance Programs

Finding DPA programs requires knowing where to look. Here are the most effective resources:

Down Payment Resource Database

Down Payment Resource maintains the most comprehensive database of assistance programs:

• National coverage: Over 2,000 programs tracked
• Search tool: Find programs by location and buyer profile
• Professional tools: Resources for lenders and real estate agents
• Regular updates: Current information on available assistance

HUD Resources

The U.S. Department of Housing and Urban Development offers several pathways:

• HUD.gov/states: State-by-state breakdown of programs
• HUD-approved counselors: Local guidance and program referrals
• Local HUD offices: Regional resources and information

Local and Community Resources

Don't overlook local options:

• City and county housing departments: Municipal assistance programs
• Community development organizations: Neighborhood-specific assistance
• Employer programs: Some employers offer homebuying benefits
• Union programs: Certain unions offer member assistance

Mortgage Lenders

Many mortgage lenders offer their own DPA programs or can help connect you with available assistance:

• Bank and credit union programs: Institution-specific assistance
• Lender-matched programs: Coordination with state and local DPA
• Proprietary grants: Some lenders offer their own grant programs

Special Programs for Specific Professions

Certain professions have access to unique homebuying assistance:

Good Neighbor Next Door Program

HUD's Good Neighbor Next Door program offers a 50% discount on the list price of homes in designated revitalization areas for:

• Law enforcement officers
• Teachers (pre-K through 12th grade)
• Firefighters
• Emergency medical technicians (EMTs)

The catch: You must commit to living in the home as your sole residence for at least 36 months. Homes are available through a lottery system, and selection is competitive.

Homes for Heroes

Several nonprofit and private programs offer discounts and assistance to:

• Military service members and veterans
• Healthcare workers
• First responders
• Teachers

These programs typically provide rebates on real estate services or reduced closing costs rather than direct down payment assistance.

How to Apply for Down Payment Assistance

The application process for DPA programs typically follows these steps:

Step 1: Assess Your Eligibility

Before applying, gather information about:

• Your household income and household size
• Your credit score and credit history
• Whether you meet first-time buyer definitions
• Your target purchase price and desired location

Step 2: Research Available Programs

Use the resources mentioned above to identify programs you may qualify for:

• Check multiple programs—you may qualify for several
• Understand each program's specific requirements
• Note application deadlines and funding availability

Step 3: Complete Homebuyer Education

Many programs require HUD-approved homebuyer education:

• Online and in-person options available
• Topics covered: Budgeting, mortgage process, homeownership responsibilities
• Certificate required: Keep your completion certificate for applications
• Find courses: Visit HUD.gov for approved providers

Step 4: Get Pre-Approved with a Participating Lender

Many DPA programs require working with approved lenders:

• Identify lenders who participate in your chosen program
• Complete mortgage pre-approval
• Discuss DPA options with your loan officer

If you're new to the home buying process, our first-time homebuyer guide covers the steps to prepare financially.

Step 5: Submit Your Application

The application process typically involves:

• Completing program-specific application forms
• Providing income documentation (W-2s, pay stubs, tax returns)
• Submitting proof of assets and liabilities
• Providing homebuyer education certificate
• Signing required disclosures and agreements

Step 6: Coordinate with Your Home Purchase

DPA applications must align with your home purchase timeline:

• Allow extra time: DPA processing can add several weeks to closing
• Coordinate parties: Work closely with your lender, real estate agent, and DPA administrator
• Property requirements: Ensure your chosen property meets program requirements

Pros and Cons of Down Payment Assistance

Before pursuing DPA, weigh the advantages and disadvantages:

Advantages

Financial benefits:

• Reduces or eliminates out-of-pocket down payment costs
• Preserves cash for emergencies, moving expenses, and home repairs
• May help you buy sooner than saving alone would allow
• Grants and forgivable loans may cost nothing if you stay in the home

Access to homeownership:

• Makes homeownership possible for those who couldn't otherwise afford it
• Helps build wealth through home equity over time
• Can be combined with low-down-payment mortgage programs like FHA, VA, or USDA

Additional support:

• Required homebuyer education improves financial literacy
• HUD counselors provide ongoing support
• Many programs include post-purchase resources

Disadvantages

Program restrictions:

• Income limits may exclude moderate earners
• Geographic restrictions on some programs
• Property type limitations (typically owner-occupied only)
• Must work with approved lenders, potentially limiting your options

Repayment obligations:

• Some loans must be repaid if you move or sell early
• Recapture provisions may reduce proceeds from home sale
• Refinancing may trigger repayment of assistance

Process complications:

• Additional paperwork and application steps
• May extend your closing timeline
• Limited funding—programs may run out of money
• Requires coordination between DPA program and primary mortgage

Potential costs:

• May result in slightly higher mortgage interest rates
• Some programs charge fees
• Certain programs are structured as loans with interest

Common Mistakes to Avoid

When pursuing down payment assistance, avoid these pitfalls:

Not checking income limits early: Many buyers assume they make too much and don't apply. Always verify—you might be surprised at how generous some income limits are.

Waiting until you find a home: Start researching DPA programs before house hunting. Some have long application processes or limited funding windows.

Only considering one program: Multiple programs may serve your area. Compare options to find the best fit for your situation.

Ignoring program requirements: Missing a homebuyer education course or using a non-approved lender can disqualify you at the last minute.

Not understanding repayment terms: Read the fine print on forgiveness periods and recapture provisions. Know exactly when and why you might need to repay assistance.

Frequently Asked Questions

Conclusion

Down payment assistance programs make homeownership achievable for thousands of Americans who might otherwise spend years—or decades—saving for a down payment. With more than 2,000 programs available nationwide, the challenge isn't finding help; it's finding the right program for your situation.

Start by assessing your eligibility based on income, credit, and first-time buyer status. Use resources like Down Payment Resource and your state housing finance agency to identify programs in your area. Complete homebuyer education early, and work with a lender experienced in DPA programs.

The key is to start early. Research programs while you're still improving your credit and building savings. Apply before you find your dream home, not after. And remember that many programs have limited funding—being proactive gives you the best chance of securing assistance.

Homeownership builds wealth, provides stability, and offers benefits that renting simply cannot match. If a down payment has been your barrier, assistance programs may be the bridge you need. Take the first step today by exploring what's available in your community.

For more guidance on the home buying process, see our first-time homebuyer guide and learn how your credit score affects mortgage approval.