[Down Payment Assistance Programs](/blog/first-time-homebuyer-grants-2026) in 2026: Complete Guide

Saving for a down payment is the biggest barrier to homeownership for most Americans. Even with low-down-payment loan options like FHA (3.5%) and conventional (3%), coming up with $15,000-$25,000 in cash can take years.

The good news? There are thousands of down payment assistance (DPA) programs across the country offering grants, forgivable loans, and low-interest loans to help qualified buyers. Many people don't even know these programs exist—or assume they won't qualify.

Here's everything you need to know about down payment assistance in 2026.

What Is Down Payment Assistance?

Down payment assistance programs provide financial help to homebuyers for:

• Down payment (the upfront cash needed to buy)
• Closing costs (fees to finalize the loan)
• Both (most comprehensive programs)

Types of DPA Programs

1. Grants

True free money that you never have to repay.

Example: A $10,000 grant toward your down payment that requires no repayment ever.

2. Forgivable Loans

Loans that are forgiven over time if you meet certain conditions (usually living in the home for a specific period).

Example: A $15,000 [second mortgage](/blog/best-heloc-lenders-2026) that's forgiven at 20% per year over 5 years. Stay 5 years = $0 owed.

3. Deferred-Payment Loans

Loans with no monthly payment that are due when you sell, refinance, or pay off the first mortgage.

Example: A $20,000 silent second mortgage at 0% interest. No monthly payment. Due when you sell or refinance.

4. Low-Interest Loans

Second mortgages with below-market interest rates and monthly payments.

Example: A $12,000 second mortgage at 2% interest (vs. market rate of 7%) with a monthly payment of ~$50.

5. Matched Savings Programs (IDA)

Individual Development Accounts where your savings are matched, sometimes dollar-for-dollar or more.

Example: You save $3,000, the program matches with $6,000 = $9,000 total for down payment.

Who Qualifies for DPA?

Eligibility varies by program, but common requirements include:

Income Limits

Most programs target low-to-moderate income buyers.

Typical limits: 80-120% of Area Median Income (AMI)

What this means in real numbers (2026 estimates):

• Los Angeles County: AMI ~$92,000 → Limit often $73,000-110,000
• Dallas-Fort Worth: AMI ~$88,000 → Limit often $70,000-106,000
• Phoenix: AMI ~$85,000 → Limit often $68,000-102,000
• Rural areas: Often higher percentages allowed (up to 140% AMI)

Important: Income limits are for the household, including all borrowers. They're also adjusted for household size—limits are higher for families.

First-Time Homebuyer Status

Most programs define "first-time buyer" as:

• Haven't owned a home in the past 3 years

You don't have to be a lifetime first-timer. If you owned 5 years ago, you likely qualify.

Some exceptions:

• Displaced homemakers
• Single parents
• Veterans (some programs don't require first-time status)

Non-first-time buyer programs:

Not all DPA requires first-time status. Some programs help:

• Buyers in targeted revitalization areas
• Teachers, police, firefighters, healthcare workers
• Any buyer in specific counties/cities

Credit Score Requirements

Typical minimum: 620-640

Some programs accept scores as low as 580 if you're using FHA financing.

Higher scores = more options: With 680+, you'll qualify for more programs and better terms.

Homebuyer Education

Most programs require: Completion of a HUD-approved homebuyer education course

What this involves:

• 6-8 hour course (online or in-person)
• Topics: budgeting, mortgage process, home maintenance
• Cost: Free to $100

Why it's required: Studies show buyers who complete education are less likely to default.

Where to find courses:

• HUD.gov (list of approved counselors)
• NeighborWorks America
• Local housing authorities
• Freddie Mac CreditSmart

Property Requirements

Eligible properties (typically):

• Single-family homes
• Condos (on approved lists)
• Townhomes
• 2-4 unit properties (if you live in one unit)

Not eligible:

• Investment properties
• Vacation homes
• Condos not on approved lists (varies by program)

Location restrictions:

Many programs restrict eligible properties to:

• Specific counties or cities
• Targeted zip codes or neighborhoods
• Areas being revitalized

Loan Type Compatibility

Most DPA programs work with:

• FHA loans (most common pairing)
• Conventional loans (Fannie Mae/Freddie Mac)
• VA loans (some programs)
• USDA loans (some programs)

Check compatibility before assuming a program works with your preferred loan type.

National DPA Programs

1. Chenoa Fund

Type: Forgivable loan

How it works:

• Provides up to 3.5% of the purchase price
• Paired with FHA loans
• Forgiven over 36 months (1/36 per month)

Eligibility:

• Minimum credit score: 620
• Maximum income: Varies by location, typically 140% AMI
• Available in all 50 states
• First-time buyer not always required

Example:

$300,000 home → Up to $10,500 assistance

Catch: Higher interest rate (typically 0.25-0.5% higher than standard FHA rate)

2. USDA Single Family Housing Direct Loans (Section 502)

Type: Subsidized low-interest mortgage (not a separate DPA, but effectively provides 100% financing)

How it works:

• No down payment required
• Income-based subsidy reduces your interest rate (can be as low as 1%)
• For low-income buyers in rural areas

Eligibility:

• Income limits: 50-80% AMI (lower than most programs)
• Must be in USDA-eligible rural area
• U.S. citizen or legal resident

Example:

Instead of 7% on a conventional loan, you might pay 3-4% or even 1% depending on income.

Downside: Long processing times (60-90 days), limited inventory in rural areas

3. HomePath Ready Buyer Program

Type: Up to 3% closing cost assistance

How it works:

• Fannie Mae-owned foreclosures (HomePath properties)
• Buyers who complete homebuyer education get up to 3% toward closing costs

Eligibility:

• Complete HUD-approved homebuyer education
• Must purchase a HomePath property
• Available to all buyers (not just first-time)

How to find HomePath properties: HomePath.com

4. HUD's [Good Neighbor Next Door](/blog/teacher-mortgage-programs)

Type: 50% discount on list price

How it works:

• HUD-owned homes in revitalization areas
• 50% off for teachers, law enforcement, firefighters, EMTs
• Must live in the home for 3 years

Eligibility:

• Must be employed full-time as teacher, law enforcement, firefighter, or EMT
• In a HUD-designated revitalization area

Example:

$200,000 home → You pay $100,000 (the other $100,000 is essentially a forgivable loan that disappears after 3 years)

Catch: Limited inventory and high competition

5. State Housing Finance Agencies (HFAs)

Every state has a Housing Finance Agency offering DPA programs.

Examples:

• [California](/blog/california-heloc-guide): CalHFA MyHome Assistance (3.5% or up to $30,000)
• Texas: My First Texas Home DPA (up to 5% of loan amount)
• Florida: Florida Assist (up to $7,500)
• New York: SONYMA Down Payment Assistance (up to $40,000 in some areas)
• Illinois: 1st Home Illinois (up to $7,500)

How to find your state's programs:

Visit: [StateName] Housing Finance Agency (Google "California HFA" or similar)

Local DPA Programs

Beyond state and national programs, many cities and counties offer their own assistance.

City/County Programs

Examples:

Los Angeles:

• WISH Program: Up to $110,000 forgivable loan
• Income limits: Up to $120,000

Chicago:

• Chicago Home Buyer Assistance: Up to $10,000 grant
• Income limits: Up to $109,200

Phoenix:

• HOME Program: Up to $15,000 forgivable loan
• Income limits: Up to $95,000

Houston:

• Down Payment Assistance: Up to $30,000
• Income limits: Up to $95,850

How to find local programs:

1. Google: "[Your City] down payment assistance"
2. Call your city/county housing department
3. Ask a local lender familiar with the area
4. Check: DownPaymentResource.com (searchable database)

Employer-Assisted Housing Programs

Some employers offer down payment assistance as a benefit.

Common in:

• Healthcare systems (hospitals, networks)
• Universities and school districts
• Large corporations (especially in high-cost areas)
• Government agencies

How to check: Ask your HR department about homebuyer benefits.

How to Apply for DPA

Step 1: Research Available Programs

Start 3-6 months before you plan to buy.

Tools to search:

• DownPaymentResource.com (comprehensive database)
• HUD.gov (search by state)
• Your state's Housing Finance Agency website
• Local housing authority

What to look for:

• Assistance amount
• Type (grant vs. loan)
• Income limits
• Credit requirements
• Geographic restrictions

Step 2: Complete Homebuyer Education

Most programs require this upfront or early in the process.

Where to take it:

• Online through eHome America, Framework, or similar
• In-person through local nonprofits or housing counselors

Cost: Free to $75 typically

Time: 6-8 hours (often self-paced online)

You'll receive: A certificate of completion needed for your application

Step 3: Find a DPA-Approved Lender

Not all lenders work with DPA programs.

Some programs have a list of approved/participating lenders. Others work with any lender familiar with the program.

Questions to ask lenders:

• "Do you work with [specific DPA program]?"
• "How many DPA loans have you closed in the past year?"
• "What programs do you recommend for my situation?"

Why this matters: DPA loans have additional paperwork and coordination. Inexperienced lenders can cause delays or make mistakes.

Step 4: Get Pre-Approved

Apply for your primary mortgage and DPA simultaneously.

You'll need standard [documentation](/blog/heloc-documentation-requirements):

• 2 years of tax returns (W-2s)
• 2 months of bank statements
• Pay stubs (recent 30 days)
• Homebuyer education certificate

Additional DPA documentation:

• Proof of income (for qualification)
• Asset statements
• Employer verification (for some programs)

Step 5: Find a Property

Work with a real estate agent familiar with DPA (some programs restrict location or property type).

Heads up for sellers:

Some sellers are hesitant about DPA because:

• Longer closing times (45-60 days common)
• Additional paperwork
• [Appraisal requirements](/blog/appraisal-process-explained)

In competitive markets, DPA offers may be at a disadvantage. Counter this with:

• Strong offer price
• [Earnest money](/blog/earnest-money-explained) deposit
• Pre-approval letter showing you're qualified

Step 6: Finalize Assistance

Once under contract, your lender coordinates:

• Final DPA approval
• Second lien documentation (if applicable)
• Closing disclosure showing assistance

Common delay: DPA funds not available at closing because paperwork wasn't submitted timely. Stay on top of your lender.

Pros and Cons of DPA Programs

Advantages

✅ Get into a home sooner without waiting years to save

✅ Preserve cash reserves for emergencies and moving costs

✅ Build equity while home appreciates instead of renting

✅ Many programs are grants or forgivable (free money if you meet requirements)

✅ Opens homeownership to moderate-income buyers who are financially stable but lack savings

Disadvantages

❌ Potential for higher interest rates (some programs add 0.25-0.75% to the rate)

❌ Restrictions and conditions (must live in home for set period, can't rent it out)

❌ Extra paperwork and longer closing times (can be less competitive in hot markets)

❌ Recapture requirements if you sell early (forgivable loans may become due)

❌ Income and location restrictions limit who qualifies

DPA Myths Debunked

Myth #1: "DPA is only for very low-income buyers"

Reality: Many programs accept incomes up to $100,000-$150,000 depending on location and family size. Moderate-income earners often qualify.

Myth #2: "You have to pay DPA back"

Reality: Many programs are grants or forgivable loans. Even repayable programs often have 0% interest and no monthly payment.

Myth #3: "DPA is a scam"

Reality: Legitimate DPA programs are government-funded or nonprofit-run. Watch out for "DPA" marketed by for-profit companies that's actually just a high-cost loan.

Myth #4: "The application is too complicated"

Reality: With a knowledgeable lender, the process is manageable. The main requirement is usually just homebuyer education + standard mortgage documentation.

Myth #5: "Sellers won't accept DPA offers"

Reality: In balanced or buyer-friendly markets, DPA is common and accepted. In competitive markets, a strong offer and quick close can still win.

Tips for Success

1. Start Early

Research programs 6+ months before buying. Some have limited funding that runs out mid-year.

2. Check Funding Availability

Some programs have annual funding caps. Apply early in the fiscal year when funds are most available.

3. Improve Your Credit First

Most DPA requires 620+. If you're at 580, spend a few months boosting your score to expand your options.

4. Layer Programs

Some buyers combine:

• State DPA for down payment
• Local DPA for closing costs
• IDA matched savings

Check if programs can be stacked.

5. Understand Recapture Rules

If you must repay when selling, calculate whether the home's appreciation still makes it worthwhile. (It usually does.)

6. Work with Experienced Professionals

Use a lender and agent familiar with DPA to avoid rookie mistakes that delay or kill your deal.

The Bottom Line

Down payment assistance can be the difference between renting for another 5 years or buying a home now and building equity while the market appreciates.

Thousands of programs exist nationwide, offering anywhere from $3,000 to $100,000+ in assistance. Many are grants or forgivable loans that you'll never have to repay if you meet basic residency requirements.

Getting started:

1. Search DownPaymentResource.com for your area
2. Check your state HFA website
3. Complete homebuyer education
4. Find a DPA-experienced lender
5. Apply and start house hunting

The assistance is out there—you just need to know where to look and how to qualify. Don't let the down payment barrier keep you from homeownership when help is available.

Related Articles

• [[Conventional Loan Requirements](/blog/conventional-loan-requirements) 2026: Complete Guide](/blog/conventional-loan-complete-guide)
• How to Get a 700 Credit Score: Step-by-Step Plan
• How to Get an 800 Credit Score: Advanced Strategies