First-Time Homebuyer Down Payment Assistance Programs

If you’ve been struggling to buy a home because of the down payment requirement, homeownership may be possible with a down payment assistance program.

By Patrick Ward

Written by

Patrick Ward

Freelance writer

Patrick Ward is a personal finance writer with over nine years of experience in mortgages and real estate investing.

Edited by Reina Marszalek

Written by

Reina Marszalek

Former senior editor

Reina Marszalek has more than 10 years of experience in personal finance and is a former senior mortgage editor at Credible.

Updated February 14, 2025

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Down payment assistance for first-time homebuyers helps you cover the upfront expenses of buying a house, such as the down payment or closing costs. There are a few different types available online, and some of them don’t require repayment.

According to the National Association of REALTORS®, one of the biggest hurdles for first-time buyers is saving up for the down payment. Here’s what you need to know about first-time homebuyer down payment assistance programs and how to qualify.

What is first-time homebuyer down payment assistance?

First-time homebuyer down payment assistance programs help cover a portion of the down payment or closing costs. Some of these programs are structured as a second loan, while others are grants that don’t need to be repaid. Overall, down payment assistance is a type of first-time homebuyer incentive, similar to a homebuying tax credit.

Note:

Some down payment assistance programs are designed to expand homeownership in certain areas. Local organizations might offer assistance in the form of grants or forgivable loans to draw buyers to the region, and buyers benefit from the extra funds.

Tai Christensen, president of Arrive Home, says, “Down payment assistance programs are designed to help consumers, who are often buying their first home, by providing them with financial resources that they can use toward the down payment on their property. Since saving for a down payment can be extremely challenging for most buyers, these programs can help bridge the gap and help consumers get their foot on the property ladder.”

To receive down payment assistance, find a program in your desired location and check its requirements. Most programs have criteria that have to be met in order for you to qualify for down payment assistance, such as being a first-time homebuyer or having an income at or below a certain threshold.

How does down payment assistance work?

Typically, homebuyers must apply for down payment assistance. The requirements for programs vary, but typically include:

Homeownership: You must be a first-time buyer. Some programs allow you to qualify if you haven’t owned a home in the past three years.
Eligible income: You must meet income requirements that can vary by program and location (some commonly require you to be at or below 80% of the median income for the county where you’re buying).
Credit score: Programs often require a score of 640 or better.
Purchase price: The sale price of the property might have to be under a certain amount based on the area.

If you qualify, the funds are paid to the seller, lender, or other party on your behalf at closing.

What types of down payment assistance are available?

The three most common types of first-time home buyer programs are:

Grants
Second mortgages
Forgivable loans

Down payment assistance grants don’t have to be repaid. However, assistance received as a second mortgage will. Depending on the program, this type of assistance may come with interest, but the interest rate is usually lower than other loan products.

A forgivable loan, on the other hand, doesn’t require repayment if all of the terms and conditions are met, such as living in the property for a certain number of years before you sell.

Who qualifies for first-time homebuyer assistance?

These types of programs are meant for first-time homebuyers or homeowners who haven’t owned a home in the past three years. Programs may have other criteria, such as meeting a certain income level or living in a specific location.

However, while many programs share similarities with one another, there isn’t a uniform standard for all down payment assistance programs. The best way to find out if you qualify is to start looking for programs offered by either your state or county.

Note:

Nationwide down payment assistance programs exist as well, but these are typically second mortgages.

How to find and apply for down payment assistance programs

The U.S. Department of Housing and Urban Development (HUD) lists state homebuyer assistance programs on its website, which you can use as a starting point. Since not every down payment assistance program will be listed there, you should also check your local government’s website.

Tip:

If you’re flexible about your purchase area, you may also want to consider looking at programs in nearby counties, especially if it won’t greatly impact your office commute or the school district is comparable.

You can also ask your lender or mortgage broker if there are programs you may qualify for. “To ensure you find the right program, it’s best to work with a mortgage broker who has access to many down payment assistance programs,” says Reed Letson, of Elevation Mortgage. “Start searching for a local mortgage broker in your area and talk to them about your scenario. From here, they will be able to determine which program would work best for you.”

First-time homebuyer down payment assistance FAQ

Are down payment assistance programs only for low-income buyers?

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There are typically income requirements, but that doesn’t mean only low-income buyers will qualify. A common requirement is for applicants to be below 80% of the median income for the area, though some assistance programs allow buyers to qualify if they make more than the median income. It all depends on where you’re buying and what the common income for that area is.

Can down payment assistance be used with FHA loans?

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Yes, down payment assistance can be used with FHA loans. “FHA loans are the most common loan type for down payment assistance programs,” Letson says. “The assistance will typically cover the required 3.5% down payment requirement. The downside is that the buyer must still come up with closing costs unless they can find a seller who is willing to make concessions.”

Do I have to repay down payment assistance grants?

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No, any down payment assistance received via a grant does not have to be repaid. However, you may need to meet additional requirements. If you don’t understand the terms and conditions of the grant, make sure you speak with a grant officer.

Are there specific state or local programs available?

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Yes, in fact, many of the down payment assistance programs that are available are either state- or county-specific. They are often clustered near cities, but rural programs also exist. A good place to start looking for homebuyer assistance programs near you is HUD’s website. However, you may find programs near you by searching your county’s government page. You can search for “down payment assistance,” “first-time homebuyer,” and “homeowner assistance.”

How does down payment assistance affect my mortgage?

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“If you opt for down payment assistance, you may have a slightly higher interest rate,” Letson says. “It may also require you to provide tax returns (even if you are not self-employed), and the pre-approval process goes through a more lengthy process. If it's done through a state agency, you will be required to submit all paperwork to them for their approval after it's been approved by the lender, which will extend the buying process.”

Many lenders typically don’t advertise or discuss the existence of such programs when pre-approving buyers.

Meet the expert:

Patrick Ward