How Down Payment Assistance Works

Down payment assistance (DPA) helps cover the cash you need at closing: the down payment, and often closing costs. Most statewide programs come from your state's housing finance agency (HFA).

How you get it

State HFA assistance is almost always paired with the agency's own first mortgage, and you apply through one of its participating lenders, not the agency directly. Expect a homebuyer education course, a minimum credit score, and income and purchase price limits.

Grant, forgivable, deferred, repayable

• Grant: not repaid.
• Forgivable loan: forgiven after you live in the home for a set period (often 5–15 years). Leave or refinance early and you may owe some or all of it.
• Deferred loan: no monthly payments; repaid when you sell, refinance, or pay off the first mortgage.
• Repayable loan: a second loan with monthly payments.

"First-time homebuyer" usually means 3 years

Most programs count you as a first-time buyer if you haven't owned the home you lived in during the past three years. Many waive the rule for veterans or for homes in federally "targeted areas."

Trade-offs to ask about

• Some programs carry a slightly higher first-mortgage rate in exchange for the assistance.
• Ask what you'd owe if you sell or refinance early.
• Ask whether the program can be combined with city, county or employer assistance.

A HUD-approved housing counselor can walk you through options for free or low cost: find one at hud.gov ↗.