Homebuying

Down Payment Assistance Guide

Discover grants, forgivable loans, and programs that can help you cover your down payment and closing costs.

NMHL Team2026-01-1410 min read

What Is Down Payment Assistance?

Down payment assistance programs help homebuyers cover the upfront costs of purchasing a home, including the down payment and sometimes closing costs. These programs are offered by state and local housing agencies, nonprofits, employers, and even some lenders. DPA can come in the form of grants that do not need to be repaid, forgivable loans that are forgiven after a set period of time, deferred-payment loans with no payments until you sell or refinance, or low-interest second mortgages. Over 2,400 DPA programs exist across the United States, yet many eligible buyers do not know they exist or how to access them.

An estimated 87% of owner-occupied homes in the U.S. are in areas covered by at least one down payment assistance program.

Types of DPA Programs

DPA programs fall into several categories. Grants are the most favorable as they never need to be repaid. Forgivable second mortgages are forgiven after you live in the home for a specified period, typically 5-15 years. Deferred-payment second mortgages require no monthly payments but must be repaid when you sell, refinance, or pay off the first mortgage. Matched savings programs match your savings dollars on a ratio like 2:1 or 3:1. Employer-assisted housing programs provide assistance as a workplace benefit. Tax credit programs like Mortgage Credit Certificates give you a federal tax credit for a portion of your mortgage interest each year.

Key Tips

  • Start by checking your state housing finance agency website for available programs
  • Many DPA programs can be combined with FHA, VA, USDA, or conventional loans
  • Some programs are specifically designed for teachers, healthcare workers, first responders, or military

Who Qualifies for Down Payment Assistance?

Eligibility varies by program but commonly includes income limits based on the area median income, first-time homebuyer status (which often includes anyone who has not owned a home in the past three years), purchase price limits, minimum credit score requirements (typically 620-640), homebuyer education course completion, and the property must be your primary residence. Some programs are available regardless of first-time buyer status, especially those for military, teachers, or buyers in targeted areas. Income limits are often higher than you might expect, with many programs serving moderate-income households earning up to 115-150% of the area median income.

The definition of first-time homebuyer for most DPA programs includes anyone who has not owned a home in the past three years, not just those who have never owned before.

How to Apply for Down Payment Assistance

Applying for DPA starts with research and preparation. Work with a lender knowledgeable about local assistance programs, as not all lenders participate in every program. NMHL maintains partnerships with DPA programs across multiple states and can match you with the best options for your situation. You will typically need to complete a homebuyer education course, meet income and credit requirements, and apply for the DPA simultaneously with your mortgage. The DPA process adds some time to closing, so plan for a slightly longer timeline. Start early and have your documentation organized to streamline the process.

Key Tips

  • Complete a HUD-approved homebuyer education course early as many DPA programs require it
  • Ask your NMHL loan officer about DPA programs available in your target area
  • Apply for DPA as early as possible since some programs have limited annual funding
Couple holding their new home key

Knowledge Is Your Greatest Asset

Our expert guides help you make informed decisions at every step of your mortgage journey

Get Pre-Approved Today

Get the Free PDF Version

Download a printable PDF with checklists, worksheets, and expert tips you can reference offline — completely free.

Related Guides

First-Time Homebuyer Guide

Complete guide for first-time buyers.

FHA Loan Complete Guide

FHA loans pair well with many DPA programs.

Closing Costs Explained

Some DPA programs also cover closing costs.

Trusted by Homeowners Nationwide

Real reviews from Google — see why families trust NMHL

Loading application...

Our Presence

Click on endorsed states to see our direct resources!

National Mortgage Home LoansALARAZCACOFLGAIAIDILINKSKYLAMIMNMTNCNJOHOKPASCSDTNTXWAWIWY

Frequently Asked Questions

It depends on the program type. Grants never need to be repaid. Forgivable loans are forgiven after a set period of living in the home. Deferred-payment loans must be repaid when you sell, refinance, or pay off the first mortgage. Low-interest second mortgages require monthly payments. Your loan officer can help you find the most favorable program.

Yes, most DPA programs can be used in combination with FHA, conventional, VA, or USDA loans. FHA loans are particularly popular with DPA programs because they allow lower credit scores and higher debt-to-income ratios, making it easier for more buyers to qualify.

Amounts vary by program but typically range from $5,000 to $50,000 or 3-5% of the purchase price. Some programs in high-cost areas offer even more. Many buyers combine multiple programs to maximize their assistance.

Related Resources

First-Time Homebuyer Guide

Complete guide for first-time buyers.

FHA Loan Complete Guide

FHA loans pair well with many DPA programs.

Closing Costs Explained

Some DPA programs also cover closing costs.

FHA Loans

Federal Housing Administration (FHA) loans are government-backed mortgages designed to help first-time homebuyers and those with less-than-perfect credit achieve homeownership. With lower down payment requirements and flexible credit guidelines, FHA loans make homeownership accessible to more Americans.

Conventional Loans

Conventional loans are not backed by government agencies and typically offer the most flexibility for qualified borrowers. With options for as little as 3% down and the ability to cancel mortgage insurance, conventional loans are ideal for borrowers with good credit.

USDA Mortgages

USDA Rural Development loans help moderate-income buyers purchase homes in eligible rural and suburban areas. With no down payment required and competitive rates, USDA loans make homeownership possible in qualifying communities across America.

Ready to Put This Knowledge to Work?

Connect with an NMHL mortgage expert who can help you apply what you have learned.