Down Payment Assistance: How to Find and Qualify for a Program

Down payment assistance programs exist in nearly every state, and most first-time buyers either don’t know about them or assume they won’t qualify. They’re administered by state housing finance agencies, cities, counties, and some employers — not by lenders themselves.

The forms assistance usually takes:

• Grants, which never have to be repaid
• Forgivable second mortgages, erased after you occupy the home for a set period — often five to ten years
• Deferred second mortgages, repaid only when you sell, refinance, or pay off the first mortgage
• Low-interest second mortgages, repaid monthly alongside the first

Typical qualification requirements:

• Income limits, usually tied to the area median income for the county where you’re buying
• A purchase price cap on the property
• First-time buyer status, which many programs define as not having owned a home in the past three years
• A homebuyer education course, generally a few hours and available online
• Use of an approved lender, since not every lender is authorized to originate with every program

The programs with the most generous terms are often the least advertised, and many are city- or county-level rather than statewide. Ask your lender which programs they’re approved to originate, and check your state housing finance agency directly — funding is frequently first-come, first-served and can run out well before year-end.