Down Payment Assistance ProgramsWhat Is Available and Who Qualifies?
Not having the full down payment saved is one of the most common reasons people delay buying a home. Down payment assistance programs — grants, low-interest second loans, and first-time buyer programs — can close that gap.
Saman Khanian
Author & Mortgage Professional
Less cash up front
Help with the down payment and closing costs
Help Covering the Down Payment — If You Meet the Rules
Down payment assistance (DPA) is money from a government agency, nonprofit, or lender that helps a buyer cover part or all of the down payment — and sometimes closing costs. It is usually aimed at first-time buyers and income-qualified households.
The catch: most DPA is not a gift you simply keep. It often takes the form of a second mortgage — sometimes with a low or zero interest rate, sometimes forgiven over time if you stay in the home. The terms decide how much it truly costs you.
What it covers
Up to the down payment
Often 3%–3.5%, sometimes more
Who it is for
First-time buyers
Plus income-qualified households
How it is repaid
It depends on terms
Grant, second loan, or forgiven later
What Down Payment Assistance Is — and Where It Comes From
DPA fills the gap between what you have saved and what you need to close. It comes from several types of organizations, each with its own rules.
The down payment is the biggest hurdle for many first-time buyers — assistance programs exist to lower it.
State and local agencies
Housing finance agencies, city and county programs, and redevelopment agencies often run buyers' programs with their own income limits and price caps.
Nonprofit organizations
Community development corporations and nonprofits offer grants, forgivable loans, and counseling, often focused on specific neighborhoods or populations.
Lenders and loan programs
Some lenders structure DPA alongside FHA, conventional, and VA financing — sometimes as a credit or second lien issued at closing.
Types of Down Payment Assistance
Not all assistance is the same. The structure determines whether the money is truly free — and what happens if you sell early.
Grant
Free money you never repay, provided you meet the program's conditions. Some grants require you to live in the home for a set period; sell early and you may need to repay it.
The most favorable form — but rarer.Forgivable second loan
A second mortgage that is forgiven over time — commonly over 5 to 10 years — as long as you stay in the home. Sell or refinance before then and the balance is usually due.
Common; stay 10 years and you may owe nothing.Deferred (silent) second
A second mortgage with little or no payment until you sell, refinance, or pay off the first loan. Interest may accrue — sometimes at 0% — and the balance comes due at the end.
Keeps payments low now, reconciled later.Low-interest second mortgage
A repayable second loan at a below-market rate with regular payments. It increases your monthly obligation but brings down the cash needed at closing.
When you can pay more each month.Not sure which form fits? We will review the programs you qualify for and explain the terms.
Apply NowWho Qualifies for Down Payment Assistance?
Every program differs, but these six factors decide eligibility almost everywhere. Check them before you start house hunting.
Household income limits
Most programs set a maximum household income, often tied to the area median income (AMI). Some allow up to 80%, 100%, or 120% of AMI or more.
Purchase price limits
The home price must usually fall under a cap. Loan limits can vary by county and by program, so a home that qualifies in one area may not in another.
First-time buyer status
Many programs are for first-time buyers — generally someone who has not owned a home in the past three years. Some allow repeat buyers in certain areas.
Primary residence only
The home must be your main home. Investment properties and second homes are not eligible for down payment assistance.
Credit and debt limits
Minimum credit scores and maximum debt-to-income ratios apply, though some programs allow lower scores than standard loans.
Buyer education
Completing a homebuyer education course from a HUD-approved counselor is a common requirement, and sometimes an ongoing occupancy term.
Good to know: DPA is usually not limited to first-time buyers everywhere. Veterans, teachers, first responders, and buyers in certain neighborhoods may have separate programs even if they have owned a home before.
Find out which programs you qualify for before you shop.
Apply NowPairing DPA With Your Mortgage
Assistance is layered on top of a first mortgage — it does not replace one. The loan you choose affects how much DPA can help and what the rules allow.
FHA loan
3.5%
The classic pairing. FHA allows lower credit scores than many conventional loans, and DPA can cover part or all of the 3.5%.
Conventional (Fannie/Freddie)
3%–5%
First-time buyers can put as little as 3% down on many conventional loans — which DPA can fully or partly cover.
VA loan
0%
VA loans require no down payment for eligible veterans, so assistance is more often used for closing costs.
Minimum down payments shown are typical minimums; your actual amount depends on credit, loan type, and program rules. Programs may also cover closing costs.
A Realistic Example
Suppose you are buying a $450,000 home with an FHA loan at 3.5% down, and a program covers the full down payment as a deferred second mortgage.
Remember: closing costs and the FHA up-front mortgage insurance premium still apply. Some programs can help with those too — ask before you sign a purchase contract.
Illustrative example only. Program availability, income limits, and terms vary by county, program, and year.
Programs in California
Where you live matters. California offers several layers of assistance — here are the categories most buyers encounter.
Statewide first-time buyer programs
California housing agencies offer below-market first mortgages paired with second mortgages or grants for income-qualified buyers.
County and city programs
Counties and cities across California run their own programs — including down payment help for teachers, nurses, and first-time buyers in specific areas.
Down payment assistance paired with FHA
Some programs are designed to stack with FHA financing, including covering the 3.5% down payment through a deferred or forgivable second.
Nonprofit and community lending
Local nonprofits and community lenders may offer grants or forgivable loans, particularly for buyers in targeted neighborhoods.
We know these programs. We can match you with what you qualify for locally.
Apply NowImportant Watch-Outs
Down payment assistance can be a strong tool — if you understand the fine print before closing.
Repayment may come due early
Forgivable loans often require you to stay in the home for a set period. Selling or refinancing sooner can trigger repayment of the full balance.
A second lien affects your total debt
A deferred second still counts for some qualification calculations, and two mortgages can complicate a later refinance.
Interest may accrue on a silent second
Even with no monthly payment, interest can grow the second loan over time. Check whether the rate is 0% or higher.
Not every lender offers it
Some loan products don't allow DPA, and some Lenders don't participate. Ask before you fall in love with a home.
Funds are limited
Programs have finite funding and can exhaust or change their guidelines. Apply while you know the terms.
Beware of upfront fees
Reputable programs do not ask for payment just to be considered. Be cautious of anyone demanding fees before approval.
How to Apply for Down Payment Assistance
The process runs alongside your regular mortgage. Here is the order that keeps everything on track.
Check your eligibility
Step 1Review your household income, target price range, and first-time buyer status against local programs.
Pre-qualify with a lender
Step 2A licensed loan officer confirms your loan options and which DPA programs can be paired with them.
Complete counseling
Step 3Most programs require a HUD-approved homebuyer education course. Do this early — it often takes a few weeks.
Get a purchase contract
Step 4Your offer should reflect that you are using assistance. Programs often need an executed contract to reserve funds.
Apply and close
Step 5Submit the DPA application with your loan file. The assistance is funded at closing, alongside your first mortgage.
No obligation — we will show you the programs and the numbers first.
Down Payment Assistance Questions, Answered
What is down payment assistance?
Money from a government agency, nonprofit, or lender that helps a buyer cover part or all of the down payment. It usually comes as a grant, a forgivable second loan, or a deferred second mortgage.
Do I have to be a first-time buyer to qualify?
Many programs are limited to first-time buyers, generally defined as not having owned a home in the past three years. Others are open to repeat buyers, or to specific groups like teachers, veterans, and first responders.
Do I have to pay the assistance back?
It depends on the program. Grants are not repaid if you meet the conditions. Forgivable loans are forgiven over time if you stay in the home. Deferred and low-interest seconds are repaid when you sell, refinance, or pay off the loan.
Can I combine several programs?
Sometimes, but not always. Stacking rules vary, and some programs restrict other liens. A loan officer can tell you what your first mortgage and each DPA program allow together.
Does DPA cover closing costs too?
Some programs help with closing costs in addition to the down payment. Others only apply to the down payment. Ask what each program covers before you apply.
What credit score do I need?
Requirements vary by program and loan type. FHA-backed programs may allow lower scores than conventional ones, while other programs set their own minimums.
Can I use DPA on an investment property?
Generally no. Down payment assistance is for primary residences. Investment properties and second homes typically do not qualify.
How long does it take to get approved?
The DPA application usually runs alongside your mortgage process and can take several weeks, including buyer education. Starting early avoids delays at closing.
Saman Khanian
Saman Khanian is the CEO of Equitable Lending, a Los Angeles mortgage lender serving first-time buyers, homeowners, and investors across California. He writes about purchase financing, FHA and conventional options, and down payment assistance — with an emphasis on matching programs to a buyer's real income and goals.
View Full ProfileDisclosure: This article is for informational purposes only and does not constitute a loan commitment, rate quote, or financial or tax advice. All figures are illustrative examples. Down payment assistance availability, income limits, eligibility, and terms vary by program, county, and year, and program funds are limited. All loans are subject to credit approval and underwriting. Equitable Lending is a licensed mortgage lender — NMLS #1124483, DRE #01941713. See our Licensing Information page and speak with a licensed loan officer about your situation.
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