For many, saving for a down payment is one of the most challenging parts of buying a home. Believe it or not, grants (money you sometimes don’t need to repay) exist to help homeowners purchase a house. There are a lot out there so if you want to speak to a professional about a program that works for you, contact us today! In this article, we will cover the basics you need to know if you are considering a down payment assistance (DPA) program to buy a home.

How Do DPA Programs Work?

Down payment assistance programs aid home buyers by providing grants, or loans, to reduce the amount needed for a down payment. In some cases, down payment assistance programs may cover closing costs too. There are specific requirements to be eligible for a DPA program, and different DPA programs have varying requirements and lenders that they work with.

There are over 2,000 DPA programs worldwide. Work with a loan officer to find the right DPA programs for you.

Types of Down Payment Assistance Programs

There are four main types of down payment assistance programs.


Loans are second mortgages that the borrower will pay back monthly, along with the primary mortgage.


Grants are essentially gifted money towards the down payment that never has to be repaid.

Deferred Loans

Deferred loans are also second mortgages; however, they have deferred payments. Therefore, this second mortgage must be repaid when the borrower moves, sells, or refinances their home.

Forgivable Loans

Forgivable loans are second mortgages that are forgiven for many years (anywhere from five to twenty years). This mortgage only gets repaid if you move, sell, or refinance before reaching the period of forgivable time. For example, if you agree to a 5 year forgivable loan, but sell the house during year 3, you would need to repay the down payment assistance amount.

Click to find a home loan that works for you.

How To Qualify for a DPA Program

There are some common eligibility requirements of down payment assistance programs. These are:

  • Home buyer status – some programs are only eligible for first-time home buyers
  • Low- to moderate-income
  • The home is within local purchase price limits
  • The home will be a primary residence only
  • You work with an approved mortgage lender and an approved mortgage program

However, each program has very specific and different requirements. Your Loan Officer will guide you through these to help you identify the best program for you.

Pros of Mortgage Down Payment Assistance Programs

  • Easier to afford a home without having to pay an upfront down payment.
  • May offer access to lower interest rates if the DPA provides a larger down payment.
  • May not require repayment if it is a grant.
  • May avoid private mortgage insurance if the DPA provides or contributes to a down payment that is greater than or equal to 20% down.

Cons of Mortgage Down Payment Assistance Programs

  • Could add financial stress later if you must repay the funds.
  • May come with restrictions of certain areas or price ranges for the home’s location.
  • Stricter eligibility requirements

Regardless of whether you use a DPA or not, it’s important to know there are home buying resources available. Buying a home doesn’t come with a rulebook but we do offer a great guide. If you are interested in financing a home with a down payment assistance program, work with us to find what may be available to you.