While many loan programs allow for a low down-payment, saving for the down payment remains the number one challenge for first time home buyers.
What is a down payment assistance (DPA) program?
A DPA program is a type of loan or grant designed to cover the down payment needed to purchase a home.
Generally, these programs are geared towards first time home buyers. They work in conjunction with the first mortgage the buyer is qualified for.
DPA programs are available directly through a lender, as well as federal, state, county, and city government programs.
Depending on the program, first time home buyers can purchase a single-family home, condo, townhome, or a multi-family property up to four units, provided they live in one of those units.
Grants
Gifts
0% Interest Loans
Forgivable
Community Programs
Flexibility
Types of Down Payment Assistance Available
A Home Grant is often from government (city, county, state) or non-profit programs. Given to help homebuyers with down payments and closing costs, typically for first-time or low-to-moderate-income buyers, with many payment grant programs being forgivable loans if you stay in the home for a set time.
Down payment assistance gifts are funds from family, friends, employers, or programs, used for home purchase. They require a gift letter to prove they’re not loans, with rules varying by loan type (Conventional, FHA, VA, USDA) on who can give and required documentation like donor bank statements showing fund removal and borrower deposits
A “non-repayable” payment assistance loan usually refers to a forgivable second mortgage, often part of a Down Payment Assistance (DPA) program. The loan balance decreases over time (e.g., 20% per year for 5 years) or is forgiven if specific conditions (like staying in the home or working for a certain employer) are met. These loans, sometimes called “soft seconds,” defer payments until you sell, refinance, or meet the forgiveness term, functioning like a grant if conditions are met, otherwise requiring repayment, sometimes with interest.
A down payment loan are repayable low-interest loans, that helps with home purchase costs, requiring repayment like a normal loan but with flexible terms, possibly starting later (deferred payment loans) or requiring a balloon payment at the end, differing from grants or forgivable loans by its structured payback plan.
Eligibility requirements for down payment assistance programs vary but generally focus on income thresholds, first-time homebuyer status, and property location.
The specific requirements vary typically require:
- 620+ credit score
- Good work history
- Verifiable income
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