Down Payment Assistance

For many families, the biggest hurdle to buying a home is coming up with the money for a down payment and closing costs. To help with this, many housing finance agencies (HFAs) offer down payment assistance to eligible homebuyers in their states.

What Is Down Payment Assistance?

Down payment assistance (DPA) programs provide grants or low-interest loans to reduce the upfront costs of homebuying. There are more than 2,000 of these programs across the U.S., managed by state, county or city governments. Depending on your circumstances and where you live, you may qualify for assistance.

Many DPA programs must be used with a first-lien mortgage from an HFA. However, some states also offer standalone assistance that can be used with other approved mortgage types. Certain programs are specifically designed for:

Veterans and active military members
First-time homebuyers
Teachers

Other down payment assistance programs are available to buyers who meet income and home price limits. These may include:

Forgivable loans: Zero-interest loans that you don’t have to pay back if you stay in the home for a set period of time
Grants: Money you do not have to repay
Deferred-payment loans: No payments due until you sell, refinance or pay off your mortgage
Low-interest loans: Repaid over time to ease the burden of upfront costs
Second mortgages: Often with flexible terms sometimes called “soft seconds”

In addition, many HFAs distribute federal funds to local nonprofits or municipalities for regional programs that do not require pairing with an HFA mortgage.

Who Qualifies?

Most DPA programs are intended for first-time homebuyers, but you may still qualify if you haven’t owned a home in the past three years. Common eligibility criteria include:

Low to moderate income
First-time homebuyer status
Primary residence requirement
Use of an approved mortgage lender
Property located in a designated area (“targeted census tract”)

Each program varies by location, but buying in a “target area” often improves your eligibility.

How to Apply

Getting started is straightforward:

Check your state’s housing finance agency website: Review available DPA programs
Look into local city or county options: See if there are additional homebuyer grants
Visit the program’s official website: Review eligibility and get a list of approved lenders
Apply for a mortgage: Use a lender approved to work with the program. Local agencies may recommend loan officers familiar with the process

Next Steps

If you’re thinking about buying a home, we can help! We’re committed to helping you get into a home you love with a payment that fits your budget. When you meet with our home lending team, be sure to ask about down payment assistance programs in your area. Click here to learn more.