What Is a Down Payment Assistance Loan?

A Down Payment Assistance (DPA) loan helps eligible homebuyers cover some or all of the upfront costs associated with buying a home—most commonly the down payment, and in some cases, closing costs as well. These programs are especially valuable for first-time buyers or those who have the income to support monthly mortgage payments but may not have enough saved for a large initial outlay.

How It Works

Down Payment Assistance can come in several forms:

• Grants: Do not need to be repaid.
• Forgivable Loans: These are second mortgages that are forgiven after a certain number of years (typically 3 to 10), as long as you remain in the home.
• Deferred Payment Loans: No payments are due until you sell, refinance, or pay off the primary mortgage.
• Low-Interest Second Mortgages: Paid alongside your primary mortgage over time.

The structure of the assistance will depend on the program you qualify for and the location of the property.

Typical Eligibility Requirements

While each program may vary slightly, most DPA programs require:

• First-time homebuyer status (generally defined as not having owned a home in the last 3 years)
• Income limits (often based on area median income)
• Minimum credit score, usually 620 or higher
• Completion of a homebuyer education course
• The home must be used as your primary residence
• Purchase price limits based on local housing market conditions

Some programs are even available to repeat buyers, veterans, teachers, healthcare workers, or first responders.

Benefits of a Down Payment Assistance Loan

• Reduces the amount of cash needed to buy a home
• Can make homeownership possible sooner
• Helps preserve your savings for future expenses
• May increase your buying power and housing options
• Often works in combination with FHA, VA, USDA, and Conventional loans

Is Down Payment Assistance Right for You?

If saving for a down payment feels like the biggest hurdle in your home buying journey, a DPA loan could be the solution. These programs are designed to make homeownership more accessible and affordable—especially for those with good credit and stable income but limited savings.

Let’s explore which down payment assistance programs you may qualify for and find the best path to homeownership.