Down Payment Assistance Programs 2026: Your Complete Guide

One of the biggest obstacles for first-time home buyers is coming up with the down payment. Even a 3.5% FHA down payment on a $300,000 home is $10,500 — and that is before closing costs. Down payment assistance programs 2026 can help cover that gap, and in some cases eliminate it entirely.

Thousands of down payment assistance programs exist across the country — offered by federal agencies, state housing finance agencies, cities, counties, nonprofits, and employers. Many buyers who qualify never apply simply because they do not know these programs exist. This guide explains what they are, how they work, and how to find the ones available in your area.

What Are Down Payment Assistance Programs?

Down payment assistance (DPA) programs are financial aid programs that help home buyers cover the down payment and sometimes closing costs on a home purchase. They are typically designed for first-time buyers (though “first-time” is often defined as anyone who has not owned a home in the past three years) and often have income limits tied to the area’s median income.

DPA programs do not replace your mortgage — they work alongside it. You still get a primary mortgage from a lender. The DPA comes in separately as a grant, a second loan, or another form of assistance. Some programs are offered directly through your lender; others require you to apply through a state or local housing agency first.

For context on how much you might need to cover, read our guide on how much down payment you need and our overview of zero down payment home loans.

The Four Main Types of Down Payment Assistance

1. Grants (Free Money)

A grant is money you receive that does not have to be repaid — ever. Grant programs are the most sought-after type of DPA because there are no strings attached after closing. Grants are typically offered by state housing agencies, local governments, and nonprofits. They are usually modest in size (often 2% to 5% of the purchase price) but can be enough to cover a full 3.5% FHA down payment.

Eligibility usually requires meeting income limits, completing a homebuyer education course, and using the home as a primary residence. Some grants have occupancy requirements — you must stay in the home for a set period or the assistance converts to a loan.

2. Forgivable Loans

A forgivable loan is structured as a loan but is gradually forgiven over time — typically three to ten years — as long as you stay in the home. If you sell, refinance, or move out before the forgiveness period ends, you must repay the remaining balance.

Forgivable loans are sometimes called “soft seconds” because they sit behind your primary mortgage as a silent second lien. They often carry 0% interest and require no monthly payments. Many state HFA programs use this structure.

3. Deferred Payment Loans

A deferred loan is a real loan with a balance you eventually have to repay — but not until you sell the home, refinance, or pay off your primary mortgage. Like forgivable loans, they often carry 0% or very low interest and no monthly payments while you live in the home.

The advantage is that you get help now and repay later out of your home equity. The limitation is that when you sell, a portion of your proceeds go toward repaying the DPA loan.

4. Matched Savings Programs (Individual Development Accounts)

Some programs match the savings you put aside for a down payment — typically at a 2:1 or 3:1 ratio. For every dollar you save, the program adds two or three dollars. These programs require you to save over a set period (often one to two years) in a dedicated savings account. They reward disciplined saving and teach financial habits alongside the assistance.

Federal Down Payment Assistance Programs

HUD-Approved Programs and the HOME Investment Partnerships Program

The U.S. Department of Housing and Urban Development (HUD) does not give money directly to buyers, but it funds local programs through the HOME Investment Partnerships Program. HOME grants money to states, cities, and counties, which then create their own DPA programs. This is why local programs vary so widely — they are all using federal HOME funds but have their own rules and structures.

HUD maintains a directory of approved housing counseling agencies at HUD.gov. These counselors can walk you through available programs in your area at no or low cost.

National Homebuyers Fund (NHF)

The National Homebuyers Fund is a nonprofit that offers down payment assistance grants in most states — up to 5% of the loan amount. NHF grants do not have to be repaid. They are offered through participating FHA, USDA, and conventional lenders. You apply through the lender, not directly through NHF. Income limits apply, and they vary by state and loan program.

USDA and VA Loans

While not traditional DPA programs, USDA and VA loans offer 100% financing — meaning no down payment required. These are covered fully in our zero down payment home loans guide. You can sometimes layer additional DPA assistance on top of these loans to cover closing costs.

State Housing Finance Agency (HFA) Programs

Every state has a Housing Finance Agency (HFA) — a government-sponsored entity that creates and funds affordable housing programs for residents. State HFA programs are among the most reliable and widely available sources of down payment assistance in the country.

While the specifics vary by state, most HFA programs share a common structure:

• You must be a first-time buyer (or not have owned in three years)
• Your income must be at or below a percentage of the area median income (AMI) — often 80% to 120% AMI
• You must purchase within the state and use the home as a primary residence
• The home must fall within purchase price limits, which vary by county
• You must complete an approved homebuyer education course
• The DPA is typically structured as a second loan (forgivable or deferred) layered on top of an HFA first mortgage

HFA programs are offered through participating lenders, not directly from the state agency. You still work with a bank or mortgage company, but they must be an approved HFA lender to offer these programs.

To find your state’s HFA, go to ncsha.org (the National Council of State Housing Agencies) and click on your state. Every HFA has its own website with program details, income limits, and lists of participating lenders.

For a breakdown of specific state programs including grant details, see our companion article on first-time home buyer grants by state.

Local Down Payment Assistance — Cities and Counties

Many cities and counties operate their own DPA programs separate from state HFA offerings. These local programs are often targeted at buyers purchasing in specific neighborhoods, at specific price points, or meeting local workforce criteria (teachers, first responders, nurses, and similar professions often get priority).

Local programs can be generous — some cities offer $10,000 to $40,000 in assistance for buyers purchasing in targeted areas. They are also less well-known, which means less competition for the funds.

To find local programs, contact your city or county housing department, or search HUD’s local resources directory at HUD.gov. A HUD-approved housing counselor can also search local programs on your behalf.

How to Layer DPA with Your Mortgage

Down payment assistance is almost always a “second layer” on top of your primary mortgage. The primary mortgage comes first — from a bank, credit union, or online lender. The DPA comes in behind it, usually as a second lien.

Here is how layering works in practice:

DPA with FHA Loans

FHA loans are the most common base loan for DPA programs because of their low credit score and down payment requirements. Most state HFA programs pair their DPA with an FHA first mortgage. The DPA covers the 3.5% down payment and sometimes a portion of closing costs. For complete FHA requirements, read our FHA loan requirements 2026 guide and our guide on FHA loan down payment requirements.

DPA with USDA Loans

USDA loans already offer 100% financing, so DPA on top of a USDA loan is typically used to cover closing costs rather than the down payment. Some programs allow this combination — check with your lender and the DPA program administrator for compatibility. Our USDA loan requirements 2026 guide has the eligibility details.

DPA with VA Loans

VA loans also offer zero down, so DPA on a VA loan usually covers closing costs or the VA funding fee. Not all DPA programs allow this combination, so confirm with the program administrator before counting on it.

DPA with Conventional Loans

Some DPA programs work with conventional loans, particularly 3% down Fannie Mae HomeReady or Freddie Mac Home Possible loans. This combination can work well for buyers with credit scores above 620 who want to avoid FHA mortgage insurance costs.

Income Limits and Eligibility Requirements

Most DPA programs target low-to-moderate income buyers. Here is the general structure of income eligibility:

Program Tier	Typical Income Limit (% of Area Median Income)	Common Program Type
Very low income	50% AMI or below	Grants, forgivable loans
Low income	51%-80% AMI	Grants, forgivable loans, deferred loans
Moderate income	81%-120% AMI	Deferred loans, matched savings
Middle income (some programs)	Up to 140%-160% AMI	Second loans at low rates

AMI limits are set by HUD every year by county. A 100% AMI income in rural Mississippi is very different from 100% AMI in San Jose, California. Always check the specific limits for your county, not a national average.

Beyond income, most programs also check:

• First-time buyer status (no homeownership in three years)
• Primary residence use only
• Purchase price limits by county
• Credit score minimums (often 620 or higher, even for FHA-paired programs)
• Completion of a HUD-approved homebuyer education course
• U.S. residency or citizenship (some programs accept permanent residents)

How to Find Down Payment Assistance Programs in Your Area

Here are the three most reliable ways to find DPA programs:

1. Down Payment Resource (downpaymentresource.com)

This is the most comprehensive DPA database available to the public. You enter your location, income, and loan type, and it shows all matching programs. Lenders also use this database, so it is the same data your loan officer would access.

2. Your State’s HFA Website

Go directly to your state housing finance agency’s website. Every state’s HFA lists its current programs, income limits, purchase price limits, and participating lenders. This is authoritative and current — much more reliable than a generic internet search.

3. HUD-Approved Housing Counselors

Find a free or low-cost housing counselor at HUD.gov. These counselors are trained to know local programs and can help you figure out which ones you qualify for, help you prepare your application, and explain what each program actually requires.

4. Ask Participating Lenders

Many DPA programs are offered through specific approved lenders. When you get quotes from lenders, ask directly: “Do you offer any down payment assistance programs?” A good lender who works with first-time buyers should know the programs in your area.

Common Down Payment Assistance Mistakes to Avoid

Assuming You Make Too Much to Qualify

Income limits are higher than many people expect, especially in high-cost areas. In some counties, a household earning $100,000 or more may still qualify for assistance. Always check the specific limits for your county before assuming you are ineligible.

Not Accounting for Homebuyer Education Requirements

Almost all DPA programs require completion of a homebuyer education course — usually 6 to 8 hours, often available online for $75 to $125. This takes time to complete. If you try to close quickly, you may not have time to finish the course. Start the course early.

Working with a Lender Who Does Not Participate in DPA Programs

Not every lender offers DPA programs, even if they offer FHA loans. If you go directly to a bank that is not an approved HFA lender, you may miss out on assistance that would have been available elsewhere. Shop specifically for lenders who offer DPA in your area.

Forgetting to Check Repayment Rules

If you receive a forgivable or deferred loan and sell the home before the forgiveness period ends, you owe money back. Make sure you understand the repayment terms — particularly the minimum number of years you must stay in the home — before you sign.

Not Stacking Programs

In many areas, you can combine a state HFA program with a local city program and sometimes a national nonprofit grant. This is called stacking, and it can cover not just your down payment but your closing costs as well. Ask your lender and housing counselor whether stacking is allowed.

Frequently Asked Questions About Down Payment Assistance

Do down payment assistance programs affect my mortgage interest rate?

Sometimes. HFA first mortgages often come with a slightly higher interest rate than market rate in exchange for the DPA assistance. The trade-off is usually worth it, but compare the total cost of the HFA loan plus DPA versus a market-rate loan without DPA to be sure.

Can I use down payment assistance on a second home or investment property?

No. All DPA programs require the property to be your primary residence. They are designed for owner-occupants, not investors.

How long does it take to apply for and receive down payment assistance?

DPA through participating lenders is handled as part of the mortgage process — it typically does not add significant time if you apply through the right lender from the start. Applying through a state agency separately can take two to four weeks. Start early and give yourself plenty of time before your target closing date.

Can I get DPA if I am not a first-time buyer?

It depends on the program. Most define “first-time buyer” as not having owned a primary residence in the past three years. If you owned a home more than three years ago, you likely qualify. Some programs in “targeted areas” (often lower-income census tracts) have no first-time buyer requirement at all.

What is a homebuyer education course and do I have to take one?

A homebuyer education course is a structured program — usually 6 to 8 hours — that covers budgeting, mortgage basics, the home buying process, and how to maintain a home. HUD-approved courses are widely available online. Most DPA programs require it. It is also genuinely useful — many first-time buyers say it helped them avoid costly mistakes.

Can down payment assistance money be used for closing costs?

It depends on the program. Some DPA programs cover only the down payment. Others cover both down payment and closing costs. Read the specific program terms carefully. For an overview of what closing costs typically include, see our guide on how much closing costs are.

For more on the broader home buying process, read our first-time home buyer checklist and steps to buying a house.