Down Payment Assistance
DPA Overview
Down payment assistance programs (DPAs) help homebuyers offset or, in some cases, fully cover the cost of the down payment when purchasing a home. Programs offer assistance in a number of different ways, with some as a percentage of the home’s value and others capped at a certain dollar value.
*Not available in Alaska, Hawaii or Washington
How Does DPA Work?
Most of these programs are offered through state-run housing finance agencies. For instance, if you qualify as a first-time homebuyer, you may qualify for federal or state down payment assistance programs. However, eligibility varies from state to state but generally is based on income and credit history.
In conclusion, regardless of assistance type, you must go through an application process and, in some cases, attend training classes on the mortgage process and finances in general.
Types Of DPA
- Grants
- Forgivable or Deferred-Payment 0% interest loans
- Low-Interest loans
- Matched Savings Programs
Federal and Nationwide programs
- FHA
- USDA
- Housing and Urban Development (HUD)
- HomePath
- Fannie Mae
- Freddie Mac
- Community Seconds
- Chenoa Fund (Not available in NY)
Benefits Of DPA
The primary benefit of DPAs is that they can allow lower- and middle-income buyers to more easily afford a home.
Down payment assistance programs may also qualify buyers for a lower interest rate on their first mortgage, since it reduces the risk the lender takes.
They come as either loans or grants. Some loans are forgivable, have no interest rate, and do not require repayment as long as you meet certain requirements.
DPA Program Requirements
You cannot own any form of rental or investment property and get first-time homebuyer down payment assistance, even if you don’t live in the property.
Eligibility is determined by your income and credit history, varying from state-to-state and program-to-program. You must apply and sometimes you’re required to attend training on the mortgage process and maintaining finances.
You must be a first-time homebuyer. Most federal and/or nonprofit programs consider anyone that hasn’t owned a home in the last three years as a first-time buyer even if you’ve owned a home before that period.