What is Down Payment Assistance?

Coming up with a down payment for a home purchase can be a challenge, especially if you're a first-time buyer or working with a tight budget. Our mortgage calculator can help you determine your mortgage budget.

Down payment assistance could help you cover upfront costs, whether it’s through grants, low-interest loans or other financial aid.  

Ready to take the next step? Start by getting a mortgage pre-approval today, and set yourself on the path to homeownership with confidence.

Several factors determine whether you qualify for down payment assistance, including your income, home purchase price and whether you’re a first-time homebuyer.  

In addition to that, many programs have specific requirements. 

Many programs are designed to help those who might not have a lot of extra cash on hand, so they set income limits.  

These limits usually depend on the average income in your area. If your income is below the limit, you might qualify for some help.  

Programs often set a maximum price for the homes they’ll help with to keep things focused on affordable housing.  

The price limits usually reflect what’s typical in your area, so they’re not the same everywhere. 

Down payment assistance is designed for first-time buyers, but even if you’ve owned a home before, you could qualify if you haven’t owned one in the past three years.  

This rule is helpful for people who are getting back into the housing market after some time away, like after selling a home or going through a major life change. 

Down payment assistance programs generally provide funds as grants, which you don’t have to repay, or as a loan with specific repayment terms. 

In some cases, you may get the assistance as a forgivable loan you won’t have to repay if you meet certain conditions, such as living in the home for a set number of years.  

There are different down payment assistance programs, and knowing which one is right for you is the first step. 

Grants are a popular form of down payment assistance because they don’t have to be repaid. These are often provided by government programs or nonprofit organizations and can cover a significant portion of your down payment.  

However, they often come with strict eligibility requirements and may be limited to specific areas or income levels. 

Forgivable loans are similar to grants but must be repaid if certain conditions are not met, such as living in the home for a specified period. 

These loans typically have 0% interest, making them an attractive option for buyers who plan to stay in their home long-term. 

Matched savings programs, also known as individual development accounts (IDAs), involve the homebuyer saving money in a dedicated account that is matched by the program.  

For example, if you save $5,000, the program might match that so you have $10,000 to use toward your down payment. These programs often require members to meet specific criteria, such as attending financial literacy courses. 

Deferred payment loans allow you to borrow money for your down payment without making payments on the loan until you sell the home, refinance or pay off the first mortgage.  

While you will eventually need to repay this loan, it can be an excellent way to reduce upfront costs when buying a home. 

Contact a loan officer to help you identify a suitable program, then review the eligibility requirements and gather necessary documents, such as proof of income.  

Most programs also require you to complete a homebuyer education course.  

After ensuring you meet requirements, you can apply through your lender or directly with the program’s administrators. 

Ready to take the next step? Start by getting a mortgage pre-approval today!