What is down payment assistance and who qualifies?
Down payment assistance (DPA) programs provide cash to help you meet your lender's minimum down payment requirement.
There's no single, national source of down payment assistance, but these programs exist at the state level throughout the U.S. Some cities and counties also offer down payment assistance programs.
Each program works a little differently, and eligibility requirements vary. Generally, most down payment assistance programs fall into two categories:
- DPA Grants: You wouldn't need to repay down payment assistance that comes in the form of a grant. Most grant programs have income caps, meaning only low- to moderate-income buyers are eligible. You may also need to complete a homebuyer education course, or a few financial counseling sessions, to qualify.
- DPA Loans: Some programs offer DPA loans, which are often 0% interest, forgivable loans, provided you meet the stipulations in the loan contract. In many cases, the loans are forgivable if you live in the home for a certain period of time.
The amount of down payment assistance you can get - and whether you qualify - will depend on the programs available in your area.
"DPA programs are great for those that need them. These programs can make or break the ability for a first-time homebuyer to get into a home and start building equity," said a branch sales manager with Fairway.
How do I find down payment assistance programs?
If you're already looking for homes, you can ask your real estate agent, loan officer, or local Housing Authority office about down payment assistance programs in your area.
Or, you can Google "down payment assistance in (your town, county, or state)."
In the search engine results, you should see a few programs offered by your state or local governments. In many areas you'll also come across nonprofits that provide grants or loans for homebuyers, in addition to the programs offered by state housing authorities.
Try to stick with websites that end in .gov or .org.
When you find the DPA programs in your area, read their fine print carefully to make sure you qualify before counting on the down payment assistance grant or loan.
"A down payment assistance program that can assist with down payment as well as closing costs might just be the best option," depending on your situation.
First-time homebuyer down payment assistance
As you read about DPA programs, you may notice they tend to target first-time homebuyers.
But if you've owned a home in the past, don't worry: You may still qualify for first-time homebuyer down payment assistance. Most DPA programs will consider you a first-time buyer if three years have passed since you last owned a home.
Programs that target first-time buyers are more likely to require a few homeownership counseling sessions or a class for new homeowners.
Not all programs are exclusive to first-time homebuyers, though.
"The biggest myth about down payment assistance programs is that you have to be a first time buyer," said Jodalee Tevault, a senior mortgage consultant with Fairway. "That is not always the case."
It's worth checking with your state housing finance agency to find out what types of assistance are available, even if you're not a first-time homebuyer. See below for a list of state housing finance agencies.
"DPA programs are great for those that need them. These programs can make or break the ability for a first-time homebuyer to get into a home and start building equity."
Can I use down payment assistance with any loan?
In most areas, you can find a down payment assistance program to work with conventional mortgages or with government-backed home loans, such as an FHA, VA, or a USDA loan.
If you use a conventional loan with 3% down or an FHA loan with 3.5% down, down payment assistance can help you cover that cost, plus your closing expenses. Even with a low down payment loan, you're looking at thousands of dollars upfront. For instance, a 3.5% down payment on a $300,000 home is $10,500.
DPA can make it that much easier to purchase a home, and it can free up more cash that you'll have on hand for repairs or updates you need to make upon moving into the home.
If you qualify for a USDA or VA loan, you may be eligible to buy a house with no down payment**. Still, USDA and VA borrowers can often get lower interest rates by making a down payment, and there are DPA programs in many areas that work with both these loan types. You may also be able to use this assistance to cover your closing costs.
But DPA isn't always the right choice, even if you're eligible for it.
"The programs often come at a premium. Many have a slightly higher interest rate than market averages and additional origination fees," Pessolano explained. "Use them if you need them, but it is most likely a better long-term strategy if you can bring your own down payment from your own funds or from gift funds."
Your loan officer can help you determine whether you qualify for down payment assistance, and when it's the right choice to use it.
"The biggest myth about down payment assistance programs is that you have to be a first time buyer."
Down payment assistance programs by state
This state-by-state guide to down payment assistance programs can help locate the DPA program you need. Keep in mind that programs and requirements can change without notice. Always verify your eligibility with the appropriate housing authority before making an offer on a home.
Alabama Housing Finance Authority
Phone number: 800-325-2432
Alabama homebuyers can start their search for down payment assistance with the Alabama Housing Finance Authority.
They may also qualify for down payment assistance for FHA and conventional loans through the state's Step Up program.
This program works by adding a 10-year loan to the borrower's 30-year fixed rate mortgage. Homeowners make payments on both loans simultaneously with one payment. Participating private lenders in the state-run Step Up program.
Participants need higher credit scores than borrowers who bring their own down payment cash. FHA borrowers need a FICO score of 640; conventional borrowers will need a 680. And assistance is limited to those who earn $130,600 a year or less.
Alaska Housing Finance Corporation
Phone number: 800-478-2432
Alaska homebuyers can start their search for down payment assistance with the Alaska Housing Finance Corporation, the state's housing finance agency.
Homebuyers in Alaska can also find down payment assistance from a network of non-profit organizations.
For example, for first-time buyers in the Anchorage area, NeighborWorks Alaska offers down payment assistance loans ranging from $1,500 to $50,000. The program requires buyers to provide at least 2% of the home's purchase price from their own funds.
You can see a full list of regional DPA providers in Alaska here.
Arizona Industrial Development Authority
Phone number: 602-319-9620
The Arizona Industrial Development Authority's HOME Plus Down Payment Assistance program helps VA, USDA, and FHA-loan borrowers across the state who earn less than $112,785 and complete a homebuyer education course.
The program can also offer conventional loan down payment assistance, but income limits for this program vary by county, and they're lower than the limits for government-backed borrowers.
HOME Plus is a form of forgivable down payment assistance. If you keep the home loan for at least three years, you'll never have to repay the loan. If you sell or refinance before three years pass, you'll need to pay off a portion of the loan's balance.
Arkansas Development Finance Authority
Phone number: 501-682-5900
Arkansas home shoppers have two statewide down payment assistance options, depending on their income level:
- Arkansas Dream Down Payment Initiative: Low-income borrowers can get this forgivable loan worth up to 10% of their home's purchase price up to $10,000. The loan will be completely forgiven after five years of homeownership.
- Arkansas Move Up Down Payment Assistance: Moderate-income borrowers can get $10,000 to use toward their down payment and closing costs through a 10-year loan that's repaid at the same interest rate as the primary mortgage.
Both programs set income limits and maximum home purchase price limits for borrowers.
California Housing Finance Agency
Phone number: 877-922-5432
California has a robust set of DPA programs. Contact the California HFA for assistance with finding one that's right for you.
Colorado Housing and Finance Authority
Phone number: 800-877-2432
Homebuyers in the Centennial State who need down payment help have a lot of choices.
In addition to programs from the Colorado Housing and Finance Authority, the Colorado Housing Assistance Corporation extends down payment assistance loans to low- and moderate-income first-time homebuyers.
But the state also has a wide variety of county and city-specific down payment assistance programs.
For example, buyers in Otero, Brent, and Crowley counties in rural, southeastern Colorado can get help from a nonprofit called Total Concept. In the city of Aurora, the municipal government runs a DPA program. In Pueblo, the NeighborWorks program can help.
Connecticut Housing Finance Authority
Phone number: 860-721-9501
The Connecticut Housing Finance Authority operates a statewide down payment assistance loan program.
Borrowers must bring at least $1,000 of their own money to the table. The DPA loan can provide up to $20,000 which could also be used toward closing costs. These loans charge low interest rates.
Additionally, a lot of cities and counties in Connecticut have their own assistance programs. Stamford residents, for example, can get help through the Housing Development Fund, Inc. Since its founding in 1989, this nonprofit has extended its service beyond Stamford to other Connecticut cities as well as nearby New York City.
Delaware State Housing Authority
Phone number: 888-363-8808
Florida Housing Finance Corporation
Phone number: 850-488-4197
Georgia Department of Community Affairs
Phone number: 800-436-7442
Hawaii homebuyers have a statewide option for down payment assistance - but only if they get their primary mortgage through the Hawaii Home Ownership Center, a nonprofit mortgage broker.
The HHOC requires a 5% down payment, but low- to moderate-income buyers can qualify for a second loan to help cover this cost, up to $10,000.
Elsewhere in Hawaii, some counties and cities such as Honolulu and Maui have their own DPA programs.
Idaho Housing and Finance Association
Phone number: 855-505-4700
Illinois Housing Development Authority
Phone number: 312-836-5200
Indiana Housing & Community Development Authority
Phone number: 317-489-4220
Iowa Finance Authority
Phone number: 800-432-7230
Kansas Housing Assistance Program
Phone number: 720-673-3947
The Kansas Housing Assistance Program offers up to 5% of a new home's purchase price through a down payment assistance grant. You'd need a credit score of 640 to apply.
You'd also need to earn within the program's income limits which vary by county. In most areas the limit is an annual income of $108,360.
For USDA and VA loans - which don't require down payments - your grant wouldn't exceed 3% of the home's purchase price. FHA and conventional loan borrowers could get a 5% grant. On a $300,000 home, 5% equals $15,000.
Kentucky Housing Corporation
Phone number: 502-564-7630
Louisiana Housing Corporation
Phone number: 225-763-8700
Maine State Housing Authority
Phone number: 207-626-4600
Maryland Mortgage Program
Phone number: 301-429-7852
The Maryland Mortgage Program offers home financing that includes down payment assistance.
You could get up to $5,000 in assistance as a silent second mortgage requiring no payments throughout the life of your first mortgage. When you move, sell, or refinance, you'd have to repay the $5,000.
Maryland also offers down payment assistance grants up to 4% of a home's purchase price.
All of the state's DPA programs work in partnership with state-approved private lenders. You'd need to apply for a primary mortgage from one of these lenders to see if you're eligible for down payment assistance.
Phone number: 617-854-1000
Michigan State Housing Development Authority
Phone number: 517-335-9885
Minnesota Housing Finance Agency
Phone number: 651-296-7608
Mississippi Home Corporation
Phone number: 601-718-4636
Missouri Housing Development Commission
Phone number: 800-246-7973
Phone number: 406-841-2840
Nebraska Investment Finance Authority
Phone number: 402-434-3900
New Hampshire Housing
Phone number: 603-472-8623
New Jersey Housing and Mortgage Finance Agency
Phone number: 1-800-NJ-HOUSE
Garden State homebuyers can get forgivable loans worth up to $10,000 to use as down payment assistance.
This program works only if you pair your down payment assistance loan with a 30-year fixed-rate mortgage through the state Housing and Mortgage Finance Agency.
This 0% interest DPA loan will be fully forgiven when homeowners keep their primary mortgage loan for the full five years.
New Mexico Mortgage Finance Authority
Phone number: 505-843-6880
North Carolina Housing Finance Agency
Phone number: 919-877-5700
North Dakota Housing Finance Agency
Phone number: 701-328-8080
Ohio Housing Finance Agency
Phone number: 614-466-7970
Oklahoma Housing Finance Agency
Phone number: 405-848-1144
Oregon Housing and Community Services
Phone number: 503-986-2000
Pennsylvania Housing Finance Agency
Phone number: 855-827-3466
Phone number: 401-457-1234
Phone number: 803-896-2211
South Carolina's SC Housing program offers down payment assistance loans attached to its primary, 30-year fixed rate mortgage loans.
Only first-time buyers can qualify except in targeted counties where the program is open to any non-homeowners.
Low-income borrowers get DPA loan forgiveness after 10 years, assuming they stay in the loan throughout the decade. Moderate-income borrowers must wait 20 years for loan forgiveness. These DPA loans require no interest or payments.
South Dakota Housing Development Authority
Phone number: 605-773-3181
Tennessee Housing Development Agency
Phone number: 615-815-2200
Utah Housing Corporation
Phone number: 801-902-8200
Vermont Housing Finance Agency
Phone number: 802-864-5743
Phone number: 804-782-1986
Virginia residents can get a down payment assistance grant up to 2.5% of their home's purchase price. The grant is available only alongside a primary mortgage loan obtained through Virginia Housing, a state agency.
Virginians can also get a second mortgage loan through the housing agency to cover the down payment required on a conventional or FHA loan.
Both programs require homebuyer education courses, and income limits apply.
Washington State Housing Finance Commission
Phone number: 206-464-7139
District of Columbia Housing Finance Agency
Phone number: 202-777-1600
West Virginia Housing Development Fund
Phone number: 304-391-8600
The West Virginia Housing Development Fund will authorize up to $10,000 for down payment assistance when homebuyers use one of the development fund's two mortgage programs.
If you're a first-time homebuyer, you could borrow money for a down payment (and closing costs) at a fixed rate for 15 years. The loan does require monthly payments alongside payments for your primary mortgage loan.
The development fund doesn't publish its income requirements; you'd need to apply with a private lender to see how much assistance you could borrow.
Wisconsin Housing and Economic Development Authority
Phone number: 608-266-7884
Wyoming Community Development Authority
Phone number: 307-265-0603
Other down payment assistance programs
American citizens who aren't residents of one of the 50 states can also find down payment assistance programs:
- In the U.S. Virgin Islands: If you've lived in St. Thomas, St. Croix, or St. John for at least three years you can apply for a down payment assistance loan through the VI Housing Finance Authority
- In Puerto Rico: First-time homebuyers whose households earn less than 120% of the median income can apply for down payment assistance through Puerto Rico's Homebuyer Assistance Program.
Combine DPA with low down payment loans
You may be able to finance 100% of the upfront costs on your home (down payment and closing costs) with down payment assistance money - if you're getting a mortgage that requires a low down payment.
Options may include:
FHA Loans: 3.5% down payment
Mortgages insured by the Federal Housing Administration require at least 3.5% down for borrowers with credit scores of 580 or higher.
USDA and VA loans: 0% down payment
Few primary mortgage loans will finance 100% of your home's purchase price, but VA and USDA loans fall within this category.
Only military servicemembers, veterans, and some surviving military spouses can get a VA loan. USDA loans are available to qualified low- to moderate-income homebuyers in rural and some suburban areas.
Many DPA programs still work with USDA and VA loans. Even though these loans don't require money down, making a down payment may improve your interest rate and overall costs on the loan.
Conventional loans: 3% down
Conventional loans are not insured by a federal agency such as the FHA, USDA, or VA. But you can still find conventional loans that require as little as 3% down.
Ask your lender about a HomePossible, HomeReady, HomeOne or Conventional 97, all of which require only 3% down. Many DPA programs offer enough help to cover a 3% down payment, depending on the price of the home.