Down Payment Assistance Programs: How to Get Help Buying a Home

A woman in Raleigh, North Carolina, had $8,000 saved. She'd been renting for six years, watching prices climb, convinced she was still "years away" from buying a house. Her lender mentioned a state program she'd never heard of. Three months later, she closed on a $310,000 home with less than $4,000 out of pocket. The program covered the rest.

She isn't unusual. She's just one of the roughly 2.5 million people who could be using one of the 2,509 active homebuyer assistance programs across the country right now, but aren't [1]. The most common reason? They didn't know the programs existed.

30-Second Summary: Down payment assistance comes as grants, forgivable loans, or deferred second mortgages. The average benefit is $18,000. You don't have to be a first-time buyer to qualify for 38% of programs. Start your search at your state Housing Finance Agency.

Four Types of Down Payment Assistance

Not all DPA is created equal. The structure of the help determines whether you ever pay it back, and under what conditions.

The most common structure is the deferred-payment loan. About 80% of DPA programs use it [1]. You won't make a monthly payment on that money, but it's not a gift. When you sell your home in ten years, part of the proceeds goes back to repay the assistance. Think of it as a silent partner who gets paid when you cash out.

Grants are the best deal, obviously. Bank of America's Community Homeownership Commitment offers up to $10,000 in down payment grants plus $7,500 in closing cost credits in eligible areas [2]. That's $17,500 in money you never repay.

Then there are "shared appreciation" models like California's Dream For All, where the state provides up to 20% of the purchase price as a loan. The catch: when you sell, you repay the loan amount plus a percentage of your home's appreciation [3]. If your $400,000 home appreciates to $500,000, you're sharing a slice of that $100,000 gain. It's not free money. It's a bet you're making with the state.

Who Actually Qualifies?

Here's where the assumptions break down. Most people hear "assistance" and think: "That's not for me. I make too much money." Or: "I've owned a home before, so I'm out."

Both assumptions are frequently wrong.

Income limits are higher than you'd expect. Most programs cap eligibility at 80% to 120% of your Area Median Income (AMI). HUD released updated AMI limits effective April 2025 [4]. In a county where the median income is $85,000, a 120% AMI cap means households earning up to $102,000 can qualify. And 10% of all DPA programs have no income restrictions whatsoever [1].

You don't have to be a first-time buyer. Fully 38% of programs accept repeat buyers [1]. The federal "first-time buyer" definition (no ownership in three years) resets more often than people realize. For more on this distinction, see our guide to first-time home buyer programs.

Typical eligibility requirements:

• Credit score: 620–640 minimum (varies by program)
• Income: Below AMI threshold for your county
• Homebuyer education course: Required by nearly every program
• Occupancy: Must be your primary residence
• Home price: Must fall below program cap (often tied to the conforming loan limit of $832,750 in 2026 [5])

A Worked Example: The $13,000 Bridge

Meet Priya, 29, a medical billing specialist in Columbus, Ohio, earning $68,000 a year. She wants to buy a $325,000 starter home using an FHA loan.

What Priya needs:

• FHA down payment (3.5%): $11,375
• Estimated closing costs (3%): $9,750
• Total cash to close: $21,125

Priya has $8,000 in savings. She's short by $13,125.

What her state HFA offers: The Ohio Housing Finance Agency's DPA program provides 4% of the purchase price as a deferred second mortgage.

• Assistance: $325,000 × 4% = $13,000
• Remaining cash needed: $21,125 − $13,000 = $8,125

Priya can close with her $8,000 savings and one more paycheck. The $13,000 second mortgage sits at 0% interest with no monthly payment. She repays it only when she sells or refinances.

The fine print matters here. If Priya sells the home after three years for $360,000, she repays the $13,000 from her proceeds. She still walks away with equity she wouldn't have built while renting. If she stays for 10+ years and the loan is forgivable (some Ohio programs are), she keeps everything.

Life doesn't always cooperate with program rules, though. A job relocation in year two, a divorce, or a need to refinance can trigger early repayment. Read the terms before you sign. I've seen people shocked to learn that refinancing to a lower rate triggered repayment of their DPA loan, wiping out half the savings they expected from the refi.

Does DPA Affect Your Interest Rate?

Sometimes. Programs administered through state Housing Finance Agencies often pair the assistance with a slightly above-market first mortgage rate. If the prevailing rate is 6.11% [6], your HFA rate might be 6.375% or 6.5%.

On a $300,000 loan, the difference between 6.11% and 6.5% is about $76 per month. Over 30 years, that's roughly $27,000 in additional interest. Is $13,000 in free (or nearly free) assistance worth $27k in extra interest? For most buyers who couldn't otherwise afford to buy, the answer is yes. You're building equity instead of paying rent. You can always refinance later if rates drop.

But for buyers who have the cash for a down payment and are choosing DPA just to keep more money in savings, the rate tradeoff might not pencil out. Run the numbers both ways using our mortgage calculator.

How to Find Programs in Your Area

There is no single federal application for DPA. That's part of the problem. The search is fragmented. Here's how to actually find what's available:

1. Your state HFA. Every state has one. Search "[state name] Housing Finance Agency" or visit the National Council of State Housing Agencies at ncsha.org for a directory.

2. HUD's local resources. Visit hud.gov/buying and select your state for a list of HUD-approved counseling agencies and local programs.

3. Down Payment Resource (downpaymentresource.com). This is the most comprehensive database, tracking all 2,509 programs. Some lenders integrate it directly into their pre-approval process. Ask yours if they do.

4. Your lender. Not all lenders participate in all programs. If your lender doesn't work with your state HFA, find one who does. This is non-negotiable. A lender who isn't familiar with DPA programs can cost you thousands.

5. Employer programs. Some large employers, hospitals, universities, and government agencies offer their own homebuyer assistance. HR departments rarely advertise these proactively. Ask.

6. Federal Home Loan Banks. The 11 regional FHLBs offer forgivable grants through their member banks. The Federal Home Loan Bank of Chicago's Downpayment Plus program, for example, provides grants to low- and moderate-income buyers through participating financial institutions [7].

Common Pitfalls

Applying too late. Many programs have limited funding that runs out each fiscal year. California's Dream For All exhausted its budget in 11 days. Start your application early in the funding cycle (often July or October, depending on the state).

Skipping homebuyer education. Nearly every DPA program requires a HUD-approved homebuyer education course. These cost $50–$100 online and take 4–8 hours. Don't leave this for the last minute. Some lenders won't even accept certificates completed after the purchase contract is signed.

Ignoring closing costs. Most DPA programs allow funds to cover both down payment and closing costs. But you have to specify this in your application. If you only use the funds for your down payment, you'll still need cash for closing costs that can run 2% to 5% of the purchase price.

Assuming your agent knows. Many real estate agents have limited knowledge of DPA programs. This isn't their fault; these programs change constantly. Do your own research and bring the information to your agent and lender.

Your Next Move

1. Check your eligibility at downpaymentresource.com. Enter your zip code, income, and household size. The tool shows every program you might qualify for.

2. Contact your state HFA directly. Websites lag behind reality. Call and ask: "What programs have funding available right now for a buyer at my income level?"

3. Get pre-approved with a DPA-participating lender. Not every lender works with every program. Ask specifically: "Do you originate loans with [state HFA name] assistance?"

4. Complete homebuyer education early. Visit eHome America or NeighborWorks for HUD-approved online courses.

5. Budget for the "gap." Even with DPA, you'll likely need $3,000–$8,000 of your own money for miscellaneous costs, earnest money, and reserves. Understanding how much home you can realistically afford will help you set the right target price.

6. If you're already building your credit score, keep going. A higher score can offset the rate premium some DPA programs charge, saving you thousands over the life of the loan.

References

1. Down Payment Resource. (2025). Q1 2025 Homeownership Program Index. DownPaymentResource.com. https://downpaymentresource.com/professional-resource/weve-added-43-programs-in-q1-2025-and-55-providers-since-q1-2024/
2. Bank of America. (2025). Community Homeownership Commitment. BankOfAmerica.com.
3. California Housing Finance Agency. (2025). Dream For All Shared Appreciation Loan. CalHFA.ca.gov. https://www.calhfa.ca.gov/dream/
4. U.S. Department of Housing and Urban Development. (2025). HUD Releases Fiscal Year 2025 Income Limits Datasets. HUDUser.gov. https://www.huduser.gov/portal/pdredge/pdr-edge-featd-article-060525.html
5. Federal Housing Finance Agency. (2025). FHFA Announces Conforming Loan Limit Values for 2026. FHFA.gov. https://www.fhfa.gov/news/news-release/fhfa-announces-conforming-loan-limit-values-for-2026
6. Freddie Mac. (2026). Primary Mortgage Market Survey. Freddie Mac. https://www.freddiemac.com/pmms
7. Federal Home Loan Bank of Chicago. (2025). Downpayment Plus Programs. FHLBChicago.com. https://www.fhlbc.com/products-programs/housing-community-grants/downpayment-plus