If you want to buy a house but don’t have enough cash for a down payment, you may be able to get some financial help. Down payment assistance programs are available to help cover those costs and make it easier for you to afford to become a homeowner. Here’s what you need to know about down payment assistance:

What Is Down Payment Assistance?

Jar of cash labeled "down payment"

Down payment assistance helps you cover your down payment if you can’t come up with enough upfront cash. Many states, counties, and cities offer programs to help home buyers cover down payments and closing costs. Down payment assistance is most commonly found through state housing finance agencies, but it can also come from counties, cities, lenders, nonprofit organizations, and even employers. Down payment and closing cost assistance is often offered along with mortgages that are geared toward first-time buyers.

Types of Down Payment Assistance

Most down payment assistance comes in the form of first-time home buyer grants and loans. However, there are multiple types of assistance programs that may be available to you. Common types of down payment assistance include:

  • Grants – This is the most valuable form of assistance. Grants provide a gift of money to use for your down payment that you never have to repay.
  • Zero-interest, forgivable loans – These forgivable loans are second mortgages that provide money to use for your down payment that you won’t have to repay as long as you live in the home for a minimum amount of time.
  • Zero-interest, deferred-payment loans – These second mortgage loans generally require no payments until the home is sold, the mortgage reaches the end of the term, or the mortgage is refinanced. These loans are never forgiven, but the proceeds from selling your home will usually cover them.
  • Low-interest loans – These loans must be repaid over a certain period of time. They help make homeownership possible by spreading the cost of the down payment and closing costs across multiple years.

Who Qualifies for Down Payment Assistance?

Senior couple shaking hands with loan officer

Many down payment assistance programs are designed to help first-time home buyers. However, some programs–usually at the local level–may target certain groups such as emergency responders, teachers, or public servants. Even if you’ve previously been a homeowner, you may still be eligible for assistance. According to Down Payment Resource, approximately 39 percent of homeownership programs are open to repeat buyers who qualify. The requirements for down payment assistance programs can vary, so do lots of research and check with your state finance authority, county and city governments, U.S. Department of Housing and Urban Development, and HUD-approved housing counselors to find assistance for which you qualify.

How to Get Down Payment Assistance

To receive down payment assistance, you will likely need to do some of the following:

  • Take a home buyer education course
  • Meet income limits
  • Purchase a home in an approved location
  • Stay below the maximum home purchase price
  • Contribute some of your own money toward the costs

To apply for down payment assistance, visit the website of the agency or organization administering the program to learn about the requirements and get a list of approved lenders. Make sure you use a lender who is approved to work with the program. Local agencies may be able to recommend lenders who have experience helping people apply for their grants. Your loan officer will then help you apply and get the assistance if you are eligible.

Now that you know more about down payment assistance, it’s time to start thinking about the home buying process. Check out our Buying 101 guide and tips for first-time home buyers to help you prepare for this exciting adventure!