Down Payment Assistance to Help Home Buyers

Worried about putting together a down payment for a home? Here's some good news. Plenty of down payment assistance programs exist to help home buyers get their foot in the door of home ownership. Here's what down payment assistance is, who qualifies for it, and some of the common types of programs.

What is down payment assistance?

When you purchase a home, you'll usually need a down payment to get a mortgage. A down payment is a lump-sum payment equivalent to a percentage of the purchase price of your home.

Down payment amounts vary depending on the home loan program you choose. Your down payment is subtracted from the purchase price of your home to determine your loan amount, and a larger down payment can help you get a more favorable interest rate. But, many home buyers, especially first-time home buyers, can't afford a large down payment. Down payment assistance programs can help cover your down payment and keep you from delaying becoming a homeowner.

Who can get down payment assistance?

Most down payment assistance programs are for first-time home buyers, but there are some options available for repeat buyers.

The requirements will vary from program to program, but in addition to being a first-time home buyer, here are some common requirements:

  • Complete a home-buyer education course.
  • Meet program income limits. Many down payment assistance programs are for low-income and moderate-income buyers. To be eligible, borrowers must have a household income that falls below the income limit.
  • Meet location requirements. Some programs are location-specific, and you must purchase in an approved location.
  • Stay below the maximum home purchase price, which is usually based on an area's median home purchase price.
  • Contribute some of your own funds toward the home purchase.

How do down payment assistant programs work?

Down payment assistance programs can be grants, loans, and other types of programs. They are often run by government entities, like your local or state housing authority, or by a non-profit.

You'll want to apply for your mortgage with a lender who has experience with the program. You can talk to your mortgage lender about it, or local agencies may be able to provide a list of approved lenders who have experience helping people apply for their programs.

Eligibility will be program-specific, but usually, it will be determined by your income and credit score. Typically, you'll need to apply for the program, and there may be other requirements, like mandatory training on home-buyer education or finances.

Types of down payment assistance


Down payment assistance grants are gifts that cover your down payment. That means they don't need to be repaid. Since this is free money, grant programs offer the best down payment assistance available.

Forgivable Loans

Forgivable mortgage loans are second mortgages that are forgiven if you stay in the home for a set number of years. They have a 0% interest rate, and you won't have to pay them back as long as you meet the requirements. If you move before the forgiveness period ends, you'll be on the hook for paying them back.

Deferred-Payment Loans

Deferred-payment loans can also be a good option for borrowers who need down payment assistance. These are 0% interest second mortgages that you don't have to repay until you move, sell, or refinance your first mortgage. Since these loans are not forgiven, you will have to pay them back when you leave your home. Usually, you'll pay them back using the proceeds from selling your home.

Low-Interest Loans You Pay Down

You may qualify for a low-interest second mortgage you can use to cover your down payment and closing costs. You'll repay these loans each month as you do with your first mortgage, so you'll be making two mortgage payments each month. Some organizations may offer these as 0% interest loans.

What Mortgages Can Down Payment Assistance be Used With?

You can use down payment assistance with many kinds of loan programs. It's common to apply for down payment assistance with conventional mortgages. FHA loans, VA loans, and USDA loans are government-backed mortgage programs and often have their own down payment assistance built-in.

It's always a good idea to talk to your lender about down payment assistance programs and how they may affect your mortgage.

How to Find Down Payment Assistance Programs

There are thousands of available down payment and closing cost assistance programs. Most are at the state and local level, but some national programs exist, like Fannie Mae's HomeReady program.

If you're scratching your head trying to figure out how to find these programs, here are a few places to start:



The U.S. Department of Housing and Urban Development (HUD) lists housing programs by state, including down payment assistance programs.


Look locally.

Your local city and county may offer grant programs for first-time home buyers. Do an Internet search to see what options are available.


Talk to your lender.

A good lender usually has knowledge about local down payment assistance programs. They can talk to you about eligibility and the program terms.

The Bottom Line

If you need help finding down payment funds, down payment assistance programs can be a huge help. It can take time and effort to locate these programs, but the payoff is worth it. If you have more questions about down payment assistance or low down payment loan options, talk with one of our experienced loan experts.

Start Your Loan