Down Payment Assistance Guide: Types, How to Get It

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Coming up with a down payment is often one of the biggest roadblocks to buying a home — that’s where down payment assistance comes in. These programs can help cover some or all of the upfront costs of homeownership, and in many cases don’t need to be repaid. This guide will explain the different down payment assistance programs that are available and how to find local resources.

Key takeaways

The median down payment is $57,500 — about 15% of the median home price of $385,000, according to data from ATTOM.
Down payment assistance typically comes in the form of grants or low-interest loans, and may require you to live in a certain area or fall within specific income limits.
Many, but not all, down payment assistance programs are designed for first-time homebuyers.

How does down payment assistance work?

Down payment assistance is financial aid available to eligible homebuyers, generally as grants or loans. Nonprofit organizations, government agencies and mortgage lenders typically offer these programs. And while many down payment assistance programs are focused on first-time homebuyers, some will also offer aid to repeat buyers. Depending on the program, you may not need to pay back the assistance you receive, while other programs require repayment over a certain period of time.

Types of down payment assistance

Grants: Grants provide a cash lump sum that you can use toward your down payment or closing costs. You may have to complete a homeownership education course to qualify for aid. Further, depending on the program’s structure, you may need to repay a portion of the grant if you sell or refinance your mortgage within a specific time period.
Low- or zero-interest loans: You may qualify for a low or no-interest loan to help you cover down payment expenses. This loan will be in addition to your primary mortgage, and will likely need to be repaid.
Deferred-payment loans: With a deferred payment loan, you won’t need to repay the assistance right away. However, if you sell the home or refinance the mortgage, the loan may become due.
Forgivable loans: These types of loans are similar to grants, in that you may not have to repay them if you meet certain conditions. For example, the loan may be forgivable after you’ve lived in the home for a specific number of years.
Individual development account (IDA): Some nonprofits and state and local housing agencies offer IDAs. Once you save a designated amount in the IDA, the funds are typically matched. Then, you can withdraw the money to use toward homebuying costs.
Lender assistance: Some mortgage lenders offer their own down payment assistance programs, which may include grants and loans. Ask your lender for more information about how to qualify.

Who’s eligible for down payment assistance?

It depends on the program. While many down payment assistance programs are specifically designed for first-time homebuyers, some also provide support to repeat buyers. Many programs are income-based, designed to make homeownership more accessible to borrowers with low to moderate incomes. Other programs are focused on homebuyers in specific areas.

How to get down payment assistance

Your city or state government website

You can usually find information about down payment assistance and other homebuyer resources on your city, town or state’s website.

Your state’s housing finance agency

Every state has its own housing finance agency where you can search for local aid programs. Try running an online search for your state’s name and the phrase “housing finance agency” or “housing authority.”

Nonprofit organizations

Nonprofit organizations may also offer down payment help and other types of homebuyer assistance. They generally assist low- to moderate-income families trying to buy a home.

The HUD website

Check the U.S. Department of Housing and Urban Development (HUD) homebuying programs site for a breakdown of programs offered in each state.

Down Payment Resource

This website provides an online tool that allows you to search for down payment assistance programs in your area.

Mortgage lenders

Explore home down payment assistance options at different mortgage lenders. Check out brick-and-mortar banks, credit unions and online lenders to find the best deal.

Employer-specific resources

Programs like Good Neighbor Next Door help law enforcement officers, pre-k through high school teachers, firefighters and emergency medical professionals buy homes at a 50% discount. The catch: Buyers must live in the home for at least three years to avoid repaying the assistance.

How to apply for down payment assistance

There isn’t a single, universal down payment assistance application. Instead, you’ll need to apply directly through the organization or agency offering the program. If your lender offers down payment assistance, you’ll fill out the application directly with them.

Before applying, review the program’s eligibility requirements to make sure you qualify. Gather the necessary documents as quickly as possible to avoid delays in receiving aid. These documents may include W-2s, tax returns and if required, proof that you completed a homebuyer education course.

Frequently asked questions

Whether you need to repay down payment assistance will depend on both the program and type of assistance. For example, grants usually don’t need to be repaid, while forgivable loans may require repayment under certain circumstances, such as selling the home too soon.

Yes, down payment assistance is available with conventional loans. You’ll still need to meet eligibility guidelines, such as credit, income and location requirements.

It can take several extra weeks to get down payment assistance compared to a regular mortgage — which is why it’s crucial to apply early. Some assistance programs require you to take a homebuyer education course, which can delay the process.

The main drawbacks of down payment assistance are the strict eligibility requirements and potential repayment obligations. Be sure to understand the fine print of any program you apply for.

Having income above a certain amount, living in an area that isn’t covered by the program or having a low credit score are all factors that could disqualify you from down payment assistance.

Don’t know your credit score? Get your free score on LendingTree Spring today.

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