Mortgage Market / Mortgage Process / Purchase

Understanding Mortgage Down Payment Assistance

If you’re trying to buy a home in today’s difficult market, chances are you’ve stumbled across the phrase “down payment assistance.” Down payment assistance (DPA) are special programs and grants that can help make home ownership more affordable to qualified home buyers, by lowering their down payment. The specifics of your DPA program will vary depending on what city or county you live in, but they could be your ticket to purchasing your dream home.

How do I qualify for Down Payment Assistance?

DPA programs are generally reserved for those purchasing their first home. But there are special circumstances where you may qualify if you’ve already purchased a home in the past. In most circumstances, the basic qualifications for DPA are:

  • You must be a first-time homebuyer
  • The home must be purchased as a primary residence
  • You must meet the income requirements
  • The home must fall within the purchase price limits
  • You must use an approved mortgage program from an approved mortgage lender

Remember, programs vary by location and you will need to meet the state’s specific criteria in order to qualify.

4 Different Types of DPA Programs

The four most common types of down payment assistance are:

  • Grants – This is a cash gift that does not need to be paid back. This is often put toward the down payment or in some cases the closing costs.
  • Second mortgages – This is an additional loan that will be paid monthly in addition to your primary mortgage payment. These loans often have little to no interest.
  • Deferred Loans – This is a second mortgage that does not need to be paid back until the buyer sells the home or refinances
  • Forgivable Loans – This is a second mortgage that will be forgiven after a pre-determined number of years. It will only need to be paid back if the buyer sells or refinances before the given date.

How to find out if you Qualify

The best way to find out what DPA programs you qualify for is to talk to a licensed loan officer. They will be able to provide you with the information regarding your specific location and financial situation. They will also be able to help you get pre-approved for a home loan. This will help you know exactly how much money you are qualified to borrow, before you go home shopping, making your experience much more streamlined.


Hope isn’t lost if you don’t qualify for down payment assistance. There are loan programs out there that do not require a significant down payment. FHA loans can provide up to 96.5% financing while VA loans can provide up to 100% financing. Be sure to discuss your options with your loan officer Sources: