You don't have to save the entire down payment yourself. Every year, millions of dollars in Down Payment Assistance (DPA) go unused simply because buyers don't know these programs exist. This guide breaks down the types of assistance available and how to qualify.
Types of Down Payment Assistance
Not all 'free money' is actually free. DPA programs generally fall into three categories: Grants (true free money), Forgivable Loans (second mortgages that disappear if you stay in the home for a set period), and Deferred Payment Loans (second mortgages you must repay when you sell or refinance).
DPA Types Compared
| Type | Repayment Required? | Best For |
|---|---|---|
| Grants | No | Buyers who meet strict income limits. |
| Forgivable Loans | No (if you stay 5+ years) | Buyers planning to stay in the home long-term. |
| Deferred Loans | Yes (upon sale/refi) | Buyers who need cash now but expect future equity. |
How to Qualify
Most DPA programs are administered at the state or local (city/county) level. They typically require you to be a first-time buyer (defined as not owning a home in the past 3 years), meet income limits (usually a percentage of the Area Median Income), and purchase a home below a certain price cap.
DPA Qualification Checklist
- ○Verify you meet the 'first-time buyer' 3-year rule.
- ○Check your household income against the Area Median Income (AMI) limits.
- ○Complete a HUD-approved homebuyer education course (usually required).
- ○Find a lender approved to work with your state's housing finance agency.