More than 2,000 down payment assistance programs operate across the United States, and most buyers who qualify never apply — usually because they don’t know the programs exist or assume they earn too much. Income limits are often higher than people expect, and “first-time buyer” typically means anyone who hasn’t owned a home in three years. This guide covers how these programs are structured, where to find them, and what disqualifies applicants most often.

The Four Types of Down Payment Assistance

Understanding the structure matters more than the dollar amount, because it determines whether you ever repay the money.

1. Grants

Money you never repay. The cleanest form of assistance, and the rarest. Grants typically range from $2,500 to $15,000 and often carry no occupancy requirement beyond the loan’s own terms. Because they’re outright gifts, funding runs out fastest.

2. Forgivable Second Mortgages

A lien that disappears if you stay. The most common structure. You receive a second mortgage at 0% interest with no monthly payment, forgiven entirely after a set occupancy period — commonly five to ten years. Sell or refinance before then and you repay a prorated share.

The trap: the forgiveness clock is tied to occupancy, not ownership. Converting the home to a rental can trigger repayment even if you still own it.

3. Deferred-Payment Second Mortgages

Repaid, but not now. You owe the full amount, with no payments and often no interest, until you sell, refinance, or pay off the first mortgage. This isn’t free money — it’s an interest-free loan that reduces your proceeds at sale.

4. Matched Savings Programs

Your savings, multiplied. Individual Development Accounts and similar programs match deposits at ratios from 1:1 to 4:1, sometimes higher. They require the longest lead time — typically 6 to 24 months of consistent saving — but produce the strongest habits alongside the funds.

Where to Find Programs

Start with your state housing finance agency. Every state operates one, and they administer the largest and best-funded programs. Most pair down payment assistance with below-market first mortgage rates, so the combined benefit exceeds the assistance amount alone.

Examples of what state programs look like:

  • New York (SONYMA): up to 3% of purchase price as a 0% APR loan with no monthly payments, forgiven after ten years of continuous owner-occupancy
  • Texas (My First Texas Home): up to 5% of the mortgage amount in down payment and closing cost assistance, combinable with a Mortgage Credit Certificate
  • Pennsylvania (PHFA): below-market first mortgage rates plus grants in the $5,000 to $10,000 range
  • Ohio: up to $7,500 at 0% interest, forgiven after five years of occupancy
  • California (CalHFA): deferred-payment junior loans and grants, with income limits that were revised upward on June 30, 2026 — see our California first-time buyer guide

Then check locally. Cities and counties run their own programs, often with less competition than state offerings. Municipal housing departments, community development agencies, and local nonprofits are all worth calling.

What Programs Typically Require

Requirements vary, but most share five conditions:

  • Income limits — commonly 80% to 120% of area median income, though high-cost markets run considerably higher
  • Purchase price caps — tied to local median values
  • Homebuyer education — a HUD-approved course, typically 6 to 8 hours, often available online
  • Owner-occupancy — the property must be your primary residence, usually for a defined minimum period
  • Minimum credit score — generally 620 to 640, aligned with the underlying loan program

The “first-time buyer” definition surprises people. Most programs define it as not having owned a principal residence in the previous three years — which means prior homeowners who’ve been renting frequently qualify.

Pairing Assistance With Your Loan Program

Down payment assistance layers on top of a mortgage; it isn’t a mortgage itself. The pairing matters:

  • FHA accepts DPA readily and permits 100% of the down payment from gift funds or approved assistance. Its 3.5% requirement is the smallest gap most programs need to close. See FHA loan requirements.
  • Conventional 97 requires only 3% down, and many state programs pair with it — often at better long-term cost than FHA, since conventional mortgage insurance cancels.
  • VA and USDA already require nothing down, so assistance goes toward closing costs instead. If you qualify for either, zero-down financing usually beats a conventional loan with assistance.

Not every lender participates. State programs require lenders to be approved, and many national lenders aren’t. Ask before you apply — switching lenders mid-process to access a program costs weeks.

Don’t Overlook Mortgage Credit Certificates

Administered by the same housing finance agencies, an MCC converts 20% to 50% of your annual mortgage interest into a dollar-for-dollar federal tax credit, capped at $2,000 a year — and unlike a deduction, it reduces your tax bill directly.

MCCs must be applied for during the mortgage process. They cannot be obtained after closing, which is why so many eligible buyers miss them. See our guide to first-time home buyer tax credits.

Four Mistakes That Cost Buyers Assistance

  1. Applying too late. Most programs require approval before you go under contract. Several close funding mid-year when allocations run out.
  2. Assuming you earn too much. Income limits in high-cost markets can exceed $150,000, and some reach considerably higher.
  3. Skipping the education course. It’s a hard requirement, courses fill up, and completion certificates take time to issue.
  4. Not asking about the repayment trigger. Forgivable and deferred loans behave very differently at sale. Know which you have before you sign.

Frequently Asked Questions

Do you have to repay down payment assistance?

It depends on the structure. Grants are never repaid. Forgivable second mortgages are forgiven after a set occupancy period, commonly five to ten years, but repaid on a prorated basis if you sell or refinance sooner. Deferred-payment loans are always repaid — just not until you sell, refinance, or pay off the first mortgage. Ask which structure applies before accepting any offer.

Can you use down payment assistance with an FHA loan?

Yes, and it’s the most common pairing. FHA permits the entire 3.5% down payment to come from approved assistance or gift funds, making the cash requirement effectively zero for qualifying buyers. The assistance provider must meet FHA’s source requirements, and your lender must participate in the program.

What income disqualifies you from down payment assistance?

Most programs cap eligibility between 80% and 120% of area median income, though high-cost markets run substantially higher. Because AMI is local, a household earning $140,000 may qualify in one metro and not in another. Check your specific county’s limit rather than assuming — this is the most common reason buyers don’t apply.

How long does down payment assistance take to arrange?

Plan for 30 to 60 days beyond a standard mortgage timeline. Homebuyer education, program application, and funding reservation all add steps. Start before you house-hunt, not after you’re under contract — several programs require approval before you sign a purchase agreement.

Program terms, income limits, and funding availability change frequently and vary by state, county, and municipality. Verify current requirements directly with the administering agency before making decisions. RefiGuide.org is an advertising marketplace, not a lender or program administrator.