Down payment assistance (DPA) programs can make buying a home much more affordable — but with so many programs out there, how do you choose the right one? Whether you’re looking at state, city, or lender-based assistance, understanding the differences can save you thousands and set you up for long-term success.
1. Type of Assistance Offered
DPA programs come in a variety of formats:
- Grants: Free money that doesn’t need to be repaid.
- Forgivable loans: Loans that are erased after a certain number of years in the home (usually 3–10 years).
- Deferred payment loans: Loans you don’t repay until you sell, refinance, or finish paying off your mortgage.
- Standard second mortgages: Loans with monthly payments that begin immediately.
Each has pros and cons depending on how long you plan to stay in the home and your financial flexibility.
2. Eligibility Requirements
Programs vary in who they serve. Pay close attention to:
- Income limits: Some only serve buyers below a certain income level.
- Home price limits: There may be a cap on the purchase price of the home.
- First-time buyer status: Some programs are only for first-time buyers, but others accept repeat buyers.
- Credit score minimums: Requirements can range from 600 to 680 or higher.
3. How Much You’ll Get
Some programs offer a flat amount like $5,000, while others provide a percentage of the purchase price (e.g., up to 5%). If you’re buying in a high-cost area, percentage-based help may go further.
4. Program Restrictions
Make sure to review what’s required to stay eligible. Common restrictions include:
- Staying in the home for a minimum number of years
- Using the home as your primary residence
- Completing a homebuyer education course
Breaking a requirement may result in having to repay the assistance early.
5. Repayment Terms
Some assistance is truly free — others are repayable under certain conditions. Always ask:
- Do I have to repay this?
- If yes, when and how?
- Will it impact my ability to refinance later?
6. Can You Stack Programs?
Some areas allow you to combine multiple forms of assistance. For example, you might use a state-level grant alongside a city-funded second mortgage. Be sure your lender understands how to layer programs and meet all guidelines.
Conclusion
Choosing the right down payment assistance program can help you afford a home with less stress and fewer out-of-pocket costs. But don’t just pick the first option you find — take time to compare. Talk to your lender, housing counselor, or a local housing agency to review your eligibility and run the numbers.
With the right support, the path to homeownership can be smoother, faster, and more affordable than you imagined.