Buying a home can feel exciting and scary at the same time. Many people dream of owning a place to call their own, but saving up for a down payment and closing costs can be hard. In fact, a recent survey by the National Foundation for Credit Counseling (NFCC) found that half of Americans trying to buy a home run into problems—especially paying for the down payment or closing costs. Often, people think they don’t have enough money when they actually do. But if you’re really short on cash, down payment assistance (DPA) might be the key to turning your dream into reality.
A down payment is the initial cash you pay toward your home’s price. Most lenders require between 3%–20% down. For example, on a $200,000 home, 3% is $6,000 and 20% is $40,000. DPA can cover all or part of this cost.
A payment assistance program is a way to help people pay the money needed to buy a house. Some programs give you cash, while others reduce how much you need to pay. Many first-time buyers qualify, but even repeat buyers may find help if they meet income or location rules. These programs can come from the government, community groups, employers, or even family.
Here are some common ways DPA programs work:
1. Government Programs
City, county, and state governments often use funds like the HOME Investment Partnerships Program or Community Development Block Grants (CDBG) to support homebuyers . The U.S. Department of Agriculture (USDA) offers help for rural homes. Veterans may qualify for VA loans with as little as 0% down.
2. Community Service Worker Programs
People like firefighters or teachers can get help through programs like HUD’s “Good Neighbor Next Door,” aimed at encouraging them to live where they serve.
3. Employer Programs
Some workplaces, especially schools or government agencies, offer homebuying help. Even private companies may provide moving or home purchase incentives.
4. Gifts from Family
If your lender lets you, a family gift can count toward your down payment—as long as it’s truly a gift, not a loan, and the lender approves.
Different programs deliver help in different ways:
Most programs serve qualified first time homebuyers, although the definition is sometimes surprisingly broad. You may still qualify even if you’ve owned a home before:
Even repeat buyers can sometimes find help. It’s always worth checking local options.
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There are thousands of local DPA options. Here’s where to look:
Homebuyer Education
Many programs require you to take a homebuyer education class. You’ll learn about mortgages, budgeting, and the home buying process. These classes often unlock access to programs.
Homebuyer Counseling
One-on-one help from a housing counselor can point you to the right grants, loans, or deferred offers.
HUD and HUD-Approved Counselors
The U.S. Department of Housing and Urban Development (HUD) and partner sites like HUDExchange offer nationwide program lists. Find a HUD-approved counselor to explore your options .
Lenders
Some lenders specialize in DPA. They can include grants or forgivable loans in your mortgage package. Comparison shopping can reveal who offers the best mix of loan and assistance.
Realtors
Your real estate agent may know local programs or have contacts with housing counselors. Ask, even if they don’t mention them first.
Online resources
Explore these online tools:
Taking homebuyer education is a smart first step. It usually costs little or nothing and prepares you for buying. Classes explain mortgages, interest rates, closing costs, budgets, and how to spot scams. Nearly all assistance programs require it.
When applying for down payment aid, the purchase price of your home matters. Many programs set maximum purchase prices. Always check that your desired home fits your local program’s price range.
Many homebuyers use more than one payment assistance program to cover their costs. This is called layering. For example, you might receive:
These programs must be allowed by policy. Some programs prohibit layering, so check carefully. But when layering is allowed, the right mix can stretch your budget and improve your mortgage terms.
Nearly every down payment assistance program has income rules. These usually cap eligibility at 100–120% of your area’s median income. HUD-approved counselors like ours can help you understand your area’s income limits.
Many programs limit the purchase price of homes they support. For example:
Some down payment assistance programs require homes to be owner-occupied for a set time (like 3–5 years). Manufactured homes or rental properties often don’t qualify. Always check property type rules to avoid disqualification.
As covered earlier, certain programs target first-time homebuyers, but repeat buyers might still qualify if they meet other criteria like low-income or area-based restrictions. HUD counts as first time homebuyers those who haven’t owned a home for three years .
California Housing Finance Agency (CalHFA) offers:
From the Golden State Finance Authority:
Florida Housing Finance Corporation offers:
These programs layer well with FHA, VA, USDA, or conventional loans to meet most down payment needs.
Breaking down the home buying process helps you plan:
Besides HUD and local programs, check:
This education isn’t just a requirement—it’s a powerful tool. In these courses, you’ll learn:
These classes help you through the down payment assistance program path and give you confidence in the home buying process.
In some programs, a second mortgage is completely “forgiven” after a set number of years if you stay in the home without defaulting.
Besides the down payment, you’ll also have costs like:
Payment and closing cost assistance programs bundle support for both. The amount may match your down payment grant or second mortgage.
To be a qualified homebuyer, you typically must:
Some programs specify buyers like teachers, firefighters, or police. For example, HUD’s Good Neighbor Next Door gives a discount to certain public service workers .
Checking definitions for eligible homebuyers in the program descriptions is key.
Here’s a simple checklist to follow:
Avoid surprises later:
Homebuying can feel like a big job. But with the right payment and closing costs assistance, clear steps, and help from experts, you can buy a home even if you thought you couldn’t. Use the resources, take courses, and turn homeownership into reality.
Your best bet is to work with a professional. Talk to a housing counselor or ask your lender about down payment assistance. Ask your realtor, too. Don’t wait for anyone to offer you access to an assistance program; be proactive and ask everyone you work with. If you don’t know whom to talk to or what questions to ask, then get first-time homebuyer education before you start the homebuying process.
