Written and reviewed by Kladi Bejkolli
·Mortgage Loan Officer, NMLS #1626841·Last reviewed October 17, 2026
The straight answer
Down payment assistance programs help qualified buyers cover part of the down payment or
closing costs, but the money is not automatically free. It comes as a grant, a forgivable
loan, or a repayable loan, each with its own conditions, and eligibility depends on
income, location, and other limits set by the specific program.
What down payment assistance is, and who it is for
Down payment assistance, sometimes shortened to DPA, is help from a government agency or
nonprofit that reduces the cash you need up front to buy a home. It is usually aimed at
first-time buyers and households whose income falls within a program's limits, though
some programs are open to repeat buyers too. The programs themselves are run at the
state, county, and city level, so the rules change depending on where the property is.
That local variation is the first thing to understand: there is no single national down
payment assistance program. Two buyers with identical finances can face very different
options in two different states, or even two different counties in the same state. The
HUD guide to buying a home
points buyers to the down payment help available where they live, and that is the right
place to start.
The three main forms of assistance
Every program fits into one of three basic shapes. Knowing which shape you are looking
at tells you the most important thing about it: whether, and how, the money comes back.
Grants
Money that does not need to be repaid, as long as you meet the program's conditions.
The conditions are real: you usually have to live in the home as your primary
residence, and the grant may be tied to a specific loan type or income limit. Meet
the terms and the money is simply applied to your purchase, with nothing owed back.
Forgivable loans
Structured as a loan, but the balance is forgiven after you meet a condition,
typically living in the home for a set number of years, often three to five. Sell or
refinance before that period ends and you may owe part or all of the balance back,
sometimes out of the sale proceeds. Stay through the full period and the loan is
wiped out.
Repayable loans
A second loan you actually pay back, sometimes with low or no interest. It might be
a monthly payment, or it might be due when you sell or refinance. Because it is a
real debt, it counts against your monthly obligations and can affect how much first
mortgage you qualify for.
The conditions that come with almost every program
Assistance is never unconditional. These are the conditions you will see again and
again, and they are exactly what you should ask about before you count on any program:
Income limits. Most programs cap household income, often as a percentage of the area median income for the county where the home is.
Purchase price caps. Programs usually set a maximum purchase price, sometimes different for new construction and existing homes.
Homebuyer education. Many programs require an approved homebuyer education course before closing.
Occupancy. Assistance is almost always for a primary residence you will live in, not a second home or an investment property.
Funding availability. Programs are funded in cycles and the money can run out. A program that exists this month may pause or reopen later.
How to find programs in your area
Start with your state housing finance agency, which runs many of the biggest programs.
In Texas, for example, the
Texas State Affordable Housing Corporation (TSAHC)
offers homebuyer programs that include down payment assistance, and its website lists
current programs and requirements. Local housing authorities and city or county programs
add another layer on top of the state programs.
A lender who works in your area is a shortcut through all of it. A good loan officer
knows which programs are active, which loan types they pair with, and which ones you are
likely to qualify for, and can tell you honestly when a program does not fit. Kladi
works with borrowers nationwide and confirms the programs available in the state where
the property is, so the first question is always where the home is or will be.
How assistance combines with your mortgage
Assistance is usually recorded as a second lien on the property, sometimes called a
silent second because it has no monthly payment. It sits behind your first mortgage, and
that structure matters for three reasons.
First, it affects your cash to close: the assistance reduces what you bring to the
table, which is the whole point. Second, it affects your monthly obligations: a
repayable second loan adds a payment, while a silent second may not, but both can change
how much first mortgage you qualify for. Third, it can limit which first mortgage
programs you can use, because some lenders and loan types have rules about subordinate
financing.
That is why it is worth comparing the full picture, not just the down payment: the first
mortgage payment, the second lien, mortgage insurance, taxes, and homeowners insurance
together. The
CFPB's down payment guide
walks through low- and no-down-payment options and local assistance programs, and it is
a good companion read to this article.
A worked example: $10,000 in assistance on a $250,000 home
This is an illustration to show how the pieces fit together. It is not a real program,
and actual programs vary widely, so every number here must be verified with the program
and your lender.
The assumptions, all labeled
Home price: $250,000
Down payment: 3%, or $7,500
Estimated closing costs: $5,000 (illustrative)
Assistance: $10,000 forgivable loan, forgiven after five years of continuous owner-occupancy
Without assistance
≈ $12,500
Cash to close: $7,500 down payment plus $5,000 closing costs.
With assistance
≈ $2,500
The $10,000 covers the $7,500 down payment plus $2,500 of closing costs, leaving
about $2,500 to bring, before any program fees or lender requirements.
What happens if you sell before the five years are up?
The un-forgiven balance is typically repaid at closing, often out of the sale
proceeds. Some programs forgive a portion each year you stay; others require the
full amount back until the entire term is complete. The exact terms are set by the
program, not by the lender, so confirm them in writing before you commit.
Illustration only: figures are assumed, not quoted, and real programs vary by state,
county, and city. Verify every number with the program and your lender.
Key takeaways
Down payment assistance is not automatically free money. It comes as a grant, a forgivable loan, or a repayable loan, and each form has its own conditions.
Eligibility is tied to income, location, purchase price, and often first-time buyer status, and programs vary by state, county, and city.
Assistance usually attaches to the mortgage as a second lien or silent second, so compare your full cash to close and total monthly obligations, not just the down payment.
Start with your state housing finance agency, local housing authorities, and a lender who knows the programs in your area.
Frequently asked questions
Do I have to be a first-time buyer to get down payment assistance?
Not always. Many programs target first-time buyers, but some are open to repeat buyers,
especially when income limits are the main test. The definition of first-time buyer also
varies: some programs count buyers who have not owned a home in the past three years.
Check the specific program's rules rather than assuming you are in or out.
Does down payment assistance affect my interest rate?
It can. Some programs are tied to specific loan products or add a second lien, which can
change the rate or terms you are offered. Others are structured so the assistance does
not change your rate. The honest answer is that it depends on the program and the loan,
so compare the full offer, not just the rate.
Can I use down payment assistance with any mortgage type?
Not always. Some programs only pair with FHA or conventional loans, and some exclude
certain loan types. The program and your lender will tell you which combinations are
allowed, and that is part of comparing your real options side by side.
Kladi Bejkolli is a Mortgage Loan Officer and Branch Manager at West Capital Lending,
Inc. (NMLS #1566096), licensed in 26 states plus Washington, D.C. He founded and owned
Besa Home Mortgage, and he writes and reviews every guide on this site. NMLS #1626841.
Last reviewed October 17, 2026
Get a Cash-to-Close Review before you commit to a number.
A Cash-to-Close Review is the full picture of the money you will bring to closing, item
by item: down payment, closing costs, and how any assistance, seller concessions, or
credits change the total. It starts with a short conversation: no SSN, no documents, no
credit check.
General education only: not a quote, an offer of credit, or a promise of approval,
eligibility, or a specific rate or program. Down payment assistance programs vary by
state, county, and city, and every program has its own income limits, price caps, and
conditions. All figures in this article are illustrative and must be verified with the
program and your lender. Kladi's licensing covers 26 states plus Washington, D.C., so
eligibility is confirmed for the state the property is in. Confirm your situation with
Kladi directly.
Next step
Know your options. Understand your numbers.
Tell Kladi your goal and the state where the property is or will be, and get a plain-language rundown of the down payment assistance programs available there, and what they would do to your cash to close.
