One of the most common barriers to homeownership is saving enough money for a down payment. Fortunately, there are multiple types of down payment assistance that can help bridge the gap — and each type works a little differently.
1. Grants
Grants are funds you never have to repay. These are typically offered by state housing authorities, nonprofits, and sometimes even employers. Because they don’t add to your debt load, grants are highly desirable but often competitive.
Best for: Buyers who meet specific income or location requirements and want no repayment conditions.
2. Forgivable Loans
Forgivable loans operate like a loan but are erased over time — often in 5 to 15 years — as long as you stay in the home. If you move or refinance early, you may have to repay some or all of the loan.
Best for: Buyers planning to stay in the home long-term who want extra help without added monthly payments.
3. Deferred Payment Loans
These loans don’t need to be repaid until you sell, refinance, or pay off your mortgage. While you do eventually repay the funds, there are no payments due while you live in the home.
Best for: Buyers who expect future income growth or plan to stay in the home for several years.
4. Matched Savings Programs
Also known as Individual Development Accounts (IDAs), these programs match your savings toward a down payment, often dollar-for-dollar. You’ll need to complete financial education and meet specific savings goals to qualify.
Best for: Buyers who are still saving up and want to stretch their dollars further with matching funds.
Choosing the Right Option
The right form of assistance depends on your timeline, income, and long-term plans. It’s important to compare terms, eligibility requirements, and how each option affects your loan and homeownership costs.
Conclusion
Not all down payment assistance is the same — and that’s a good thing. With the right information and guidance, you can find a program that fits your goals and helps you buy a home sooner than you thought possible.