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Down Payment Assistance: How It Works, Where to Find It

Home buyers can apply for down payment assistance through state and local programs. Grants and forgivable loans are available.

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Updated · 2 min read
Abby Badach Doyle
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Chris Jennings
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Nerdy takeaways
  • Down payment and closing cost assistance can be a grant or loan, commonly from state housing finance agencies.
  • Other sources include nonprofits, local governments, credit unions, banks, mortgage lenders or employers.
  • Many, but not all, programs are exclusive to first-time home buyers. Many programs set income limits.
  • Want to find a program near you? Check out our nationwide list of first-time homebuyer programs.
If you want to become a homeowner but don’t have enough cash for a down payment, a down payment assistance (DPA) program might be able to help. Assistance is available to help with closing costs, too.
Here’s a beginner’s guide to common sources of down payment and closing cost assistance and how to see if you qualify.
» MORE: See closing costs, mortgage fees explained

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Who offers down payment assistance?

Down payment assistance most commonly comes through state housing finance agencies. Most states and many counties and cities offer grants and no-interest loans to help home buyers pay for down payments and closing costs. It can also come from nonprofits, lenders and even some employers.
Down payment and closing cost assistance is often offered in combination with mortgages geared to first-time home buyers. If you qualify, you can really stretch your dollar when you combine first-time home buyer benefits from multiple programs.
🤓 Nerdy Tip
Despite what you may have heard, you don’t need to make a 20% down payment to buy a house. However, a 20% down payment will help you avoid paying for private mortgage insurance. The typical down payment on a house is only 10% for first-time buyers.
» MORE: How much house can you afford?

Types of down payment assistance

The types of closing cost and down payment assistance vary by program. Common forms of assistance include:
  • Grants: Some programs provide an outright gift of money that you don’t have to pay back.
  • Zero-interest, forgivable loans: Some programs structure this help as a forgivable second mortgage, meaning the assistance is recorded as a second loan on the home but is forgiven after a certain number of years as long as you still live in the property.
  • Zero-interest, deferred-payment loans: Terms and conditions vary, but generally no payments on the second mortgage loan are due until the home is sold, the mortgage is refinanced or the mortgage reaches the end of the term.
  • Low-interest loans: These loans must be repaid over a certain period, such as 10 years. They make homeownership more attainable by spreading the down payment and closing costs over multiple years.
» MORE: What down payment is required?

Eligibility: Who qualifies for down payment assistance?

DPA program eligibility varies by location and program, but many are designed to help first-time buyers and households with moderate incomes. Some local programs target certain groups, such as teachers, police officers, emergency responders or public servants, such as government employees.
But previous homeowners can get assistance, too: More than a third, 38%, of homeownership programs are open to eligible repeat buyers, according to Down Payment Resource, a company that tracks more than 2,500 such programs.
🤓 Nerdy Tip
Even if a program has a first-time home buyer requirement, don’t count yourself out just because you've previously owned a home. The programs typically define a first-time buyer as one who hasn’t owned a home for the past three years.

Requirements: How to get down payment assistance

Requirements for down payment assistance programs vary. Commonly, you must do at least a few of the following:
  • Take a home-buyer education course.
  • Must be the home buyer’s primary residence.
  • Meet income limits. Many programs are geared to low- and moderate-income residents, and eligibility is often based on a percentage of the Area Median Income (AMI) for your location.
  • Purchase in an approved location.
  • Stay below the maximum home purchase price, which is usually a percentage of an area’s median home purchase price.
  • Contribute some of your own money toward the purchase.
» MORE: Must-know tips: Buying a home for the first time

How to find down payment assistance programs

Some places you can check for programs include:
  • Your state’s housing finance authority. Visit NerdWallet's first-time home buyer programs page and select your state to see a description of programs where you live.
  • Your city and county governments. Many cities and counties offer down payment assistance and other programs to boost homeownership.
  • The U.S. Department of Housing and Urban Development. Visit the local homebuying programs page on HUD's website and select your state to see a list of programs.
  • HUD-approved housing counselors. The Consumer Financial Protection Bureau has a tool to find a housing counselor in your area.
  • Down Payment Resource. The company offers a tool on its website to find home buyer programs in your area. The online form requires you to provide contact information.
» MORE: Try NerdWallet’s down payment calculator

How to apply for mortgage down payment assistance

Visit the website of the local government agency or organization administering the program to learn about down payment assistance requirements and to get a list of approved mortgage lenders.
Apply for a mortgage with a lender approved to work with the grant program. Local agencies may be able to recommend loan officers who have experience helping people apply for the grants they administer.
» MORE: See NerdWallet’s picks for best mortgage lenders for first-time home buyers
NerdWallet writer Isabella Angelos contributed to this story.

Mortgage loans from our partners

NBKC

on NBKC

NBKC

4.5

NerdWallet rating
Min. credit score

620

Min. down payment

3%

New American Funding

on New American Funding

New American Funding

4.0

NerdWallet rating
Min. credit score

N/A

Min. down payment

0%

GO Mortgage

on GO Mortgage

GO Mortgage

4.0

NerdWallet rating
Min. credit score

620

Min. down payment

3%

COMPARE MORE LENDERS
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