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Down payment assistance (DPA) programs help homebuyers cover some or all of the upfront costs of purchasing a home. These programs are funded by federal, state, and local governments, as well as nonprofits and employers. Despite their availability, the vast majority of eligible buyers never apply — often because they do not know these programs exist. In 2026, thousands of DPA programs are active across the country, and many have been expanded to cover more income levels and property types than in previous years.

Types of Down Payment Assistance

DPA comes in several forms. Grants are free money that never needs to be repaid — these are the most desirable but often have stricter eligibility requirements. Forgivable loans are second mortgages that are forgiven over time (typically 5-10 years) if you stay in the home. If you sell or refinance before the forgiveness period ends, you repay the remaining balance. Deferred-payment loans require no monthly payments and are repaid when you sell, refinance, or pay off the first mortgage. Low-interest second mortgages provide favorable terms for the down payment portion. Matched savings programs match your savings dollar-for-dollar up to a limit, helping you build a down payment over time.

Federal Programs

Several federal programs help with down payments. HUD-approved housing counseling agencies can connect you with local DPA programs. The HFA Preferred and HFA Advantage programs through Fannie Mae and Freddie Mac allow state housing finance agencies to offer reduced-rate mortgages with DPA. FHA loans accept down payment assistance from approved sources, making them the most DPA-friendly loan type. The Good Neighbor Next Door program offers 50% off HUD-owned homes for teachers, law enforcement, firefighters, and EMTs in designated revitalization areas. VA loans require zero down payment, effectively eliminating the need for DPA for eligible veterans.

State Housing Finance Agency Programs

Every state has a housing finance agency (HFA) that offers DPA programs. These are typically the largest and most accessible programs available. Most state HFAs offer first-mortgage loans at slightly below-market rates combined with a DPA grant or second mortgage. Income limits vary by state but typically cover households earning up to 80-120% of the area median income. Some states have expanded eligibility to include repeat buyers in targeted areas or specific professions. Check your state HFA website for current programs — they change frequently and new funding cycles open throughout the year.

Local and Employer Programs

Cities and counties often run their own DPA programs that can be layered on top of state programs. These tend to be smaller in dollar amount but can fill the gap between state assistance and your total need. Employer-assisted housing programs are growing in popularity, particularly among large employers in high-cost markets. Some employers offer forgivable loans, grants, or matched savings for employees purchasing homes near the workplace. Ask your HR department if any housing assistance is available — many employees miss out simply because they never ask.

Eligibility Requirements

Most DPA programs require that you be a first-time homebuyer, though the definition often includes anyone who has not owned a home in the past three years. Income limits are the most common restriction — typically 80% to 120% of the area median income for your household size. Some programs have purchase price limits that cap the value of the home you can buy. Many require completion of a homebuyer education course (usually 4-8 hours, available online). Credit score minimums are typically 620-660 for most programs. Occupancy requirements mean the home must be your primary residence.

How to Apply

Start by visiting your state housing finance agency website to see current programs. Contact a HUD-approved housing counseling agency for free guidance on which programs you qualify for. Work with a lender who is approved to originate loans with DPA — not all lenders participate in every program. Begin the homebuyer education course early, as it is required by most programs and takes time to complete. Apply for DPA before you go under contract, as some programs have limited funding and operate on a first-come, first-served basis. Layer multiple programs when possible — it is common to combine a state DPA with a local grant.

Common Mistakes and Tips

Do not assume you earn too much — many programs cover moderate-income households, not just low-income. Do not wait until you find a house to research DPA — some programs have waitlists or funding cycles. Do not confuse forgivable loans with grants — understand the repayment terms before committing. Make sure your lender is familiar with the specific DPA program you are using, as processing requirements differ from standard loans. Finally, DPA can be combined with Conventional, FHA, or VA financing, so use Rate Direct to compare your base rate across loan types before choosing your first mortgage.