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Down Payment Assistance: How to Find a Program for You

You could be eligible for a grant or loan worth thousands of dollars to put toward your down payment — and in some cases, you won’t have to repay it.

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By Kim Porter

Written by

Kim Porter

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Kim Porter is an expert on credit, mortgages, student loans, and debt management. She has been featured by U.S. News & World Report, USA TODAY Blueprint, Forbes Adviser, Yahoo News, and MSN.

Edited by Reina Marszalek

Written by

Reina Marszalek

Senior editor, Credible

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

Updated October 14, 2024

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.”

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When taking out a mortgage, you might have to provide a lump sum of money as the down payment. Requirements vary, but even a small down payment can become an issue if you’re strapped for cash.

Down payment assistance programs can help you bridge the gap between what you’ve saved and what you need to put down.

There are more than 2,500 grant and loan programs nationwide that can provide down payment assistance, according to a report by the Urban Institute. Better yet, they’re not just for first-time homebuyers.

What is down payment assistance?

Down payment assistance (DPA) programs provide homebuyers with cash to cover some of the major costs of buying a home. Depending on the program, you might receive a non-repayable grant or a no-interest loan to pay for some or all of the down payment and closing costs.

These programs are usually hosted by city and county governments as well as state housing finance agencies.

Who qualifies for down payment assistance programs?

Most down payment assistance programs are limited to first-time homebuyers, but this isn’t always the case.

Each program sets its own requirements and definition of “first-time homebuyer.” You could qualify even if you’ve owned a home in the past.

Some programs are also geared toward helping people in particular professions, such as military service members, firefighters, teachers, healthcare workers, and law enforcement.

Here are some common requirements for down-payment assistance programs:

  • You’re a first-time homebuyer (you haven’t owned a home in the last three years).
  • Your income meets the program’s requirements.
  • Your credit score fits the program’s minimum criteria.
  • The home you’re buying will be your primary residence.
  • The mortgage adheres to certain loan limits.
  • You might also need to take a homebuyer education course.

Requirements vary from program to program, and some are less restrictive than others. If you’re not sure if you qualify, contact the program and ask about your options.

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You’ll also need your lender’s cooperation to use the down payment assistance toward your mortgage, so double check with them before applying.

Keep Reading: How Much Down Payment Do You Need to Buy a House

Types of down payment assistance programs

Before you submit your application, it’s important to find out whether the loan has to be repaid later on.

Some programs never require repayment, while others give out loans that must be repaid when you sell the home or refinance your mortgage.

Grants

Down payment assistance grants don’t need to be repaid, so this can be an appealing option for eligible borrowers who lack the savings for a down payment.

Down payment assistance — for both grants and loans — can range from $2,000 to more than $39,000, according to the Urban Institute report. Programs usually spell out how you can use the funds.

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For example

You might be able to use down payment grants to cover closing costs such as title insurance, recording fees, and mortgage discount points. Other programs let you cover just the down payment.

Forgivable loans

A forgivable loan is typically set up as a second mortgage that you won’t need to repay as long as you meet certain requirements. If you live in the home for at least a set amount of time — around five to 15 years — then the lender forgives the debt. But if you move, sell the home, or refinance the mortgage before this time period is up, you’ll need to repay the loan.

Deferred-payment loans

These loans are usually large enough to cover your down payment and will need to be repaid, regardless of how long you live in the home.

Usually, the loan comes due when you move, sell the home, or refinance the mortgage. Most homeowners pay off deferred-payment loans through the proceeds from selling their residences.

Low-interest loans

Another option is taking out a second mortgage at the same time you close on the first mortgage. You’ll use the funds from the second home loan to cover your down payment. Then, you’ll make payments on both loans each month.

Some lenders and organizations offer these second mortgages with a low interest rate or no interest at all.

Learn More: 5 Types of Mortgage Loans: Which One Is for You?

How to find down payment assistance programs

Some federal government loan programs offer down payment help, while other programs can be found at the state, county, and city levels. Prospective homebuyers will have to search for and apply for these individually, as there’s no universal application.

Here are some things to keep in mind during your research:

Start looking with your state housing agency

Every state has a housing finance agency (HFA) that oversees affordable housing, financial assistance, and local community development programs in the state. Head to your state’s HFA website if you want broader information about housing programs, or do a Google search for a “down payment assistance program” in your state.

Don’t forget county and city housing agencies

Your county or city might offer additional programs, so check your state website for a link to your locality’s website. Once you’re there, search for links to housing assistance or public services.

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You might also find information about local property taxes, which can help you estimate some of the recurring costs of homeownership.

If you can’t find what you’re looking for, try a Google search for “down payment assistance programs” in your city.

Work with an approved lender

Once you find a down payment assistance program that looks like a good fit, you might want to find a lender that’s willing to work with you.

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Down payment assistance program options

“One of the biggest challenges for homeowners is coming up with a down payment. Fortunately, government programs like VA and USDA loans may provide a lower down payment alternative for qualified individuals,” says Mike Schmidt, a Senior Manager at Credible who has been a leader in the mortgage industry for 20 years.

If you need help saving for a down payment, here are some programs you can look into:

National Homebuyers Fund

The National Homebuyers Fund (NHF) is a nonprofit organization that offers closing cost and/or down payment assistance to both first-time homebuyers and repeat buyers nationwide. You may be able to receive up to 5% of the mortgage loan amount as a grant or forgivable loan. 

To use the program, you’ll need to fit eligibility requirements and work with a participating lender.

Chenoa Fund

The Chenoa Fund is a national down payment assistance program administered by CBC Mortgage Agency, a federally chartered government entity. Through the program’s several options, you may receive 3% to 5% of the mortgage loan amount either as a forgivable loan or a no-interest repayable loan.

You might need to meet credit score and income requirements and will need to work with participating lenders, but you typically don’t need to be a first-time buyer to qualify.

FHA loans

An FHA loan is a mortgage that’s insured by the U.S. Department of Housing and Urban Development (HUD). While the HUD isn’t a down payment assistance program, it’s similar because it lowers the upfront costs of getting a mortgage.

You may qualify for an FHA loan with a down payment as low as 3.5% if your credit score is 580 or higher. You may also be approved with a credit score as low as 500 if you can put down at least 10%. Some lenders set their own credit score requirements, though, so compare your offers.

VA loans

You may qualify for a VA loan if you’re a service member, veteran, or surviving spouse. These mortgages are backed by the U.S. Department of Veterans Affairs and have no down payment or mortgage insurance requirement.

You’ll still need to pay closing costs plus a funding fee that’s equal to 1.4% to 3.6% of the loan amount, but you can choose to roll the fee into the home loan.

USDA loans

Under another government-sponsored program, USDA home loans allow people to buy property in certain areas with no down payment.

To qualify, you’ll need to meet income eligibility requirements and buy a home within a USDA-defined rural area. There’s no minimum credit score to qualify, though individual lenders may set requirements.

Fannie Mae and Freddie Mac options

Fannie Mae and Freddie Mac, two government-sponsored entities that buy mortgages from lenders, also offer low-down-payment options to qualified homebuyers.

Fannie Mae funds the HomeReady mortgage, which requires a down payment of at least 3% for homebuyers who have a credit score of 620 or higher and earn less than 100% of their area’s median income.

Freddie Mac’s program, Home Possible, also requires a 3% down payment. There’s no credit score requirement, though homebuyers must earn less than 80% of their area’s median income.

Meet the expert:
Kim Porter

Kim Porter is an expert on credit, mortgages, student loans, and debt management. She has been featured by U.S. News & World Report, USA TODAY Blueprint, Forbes Adviser, Yahoo News, and MSN.