For many renters, the down payment is the biggest thing standing between them and a home of their own. You may not have to save it all by yourself. State and local governments, nonprofits, and some employers offer down payment assistance, often called DPA, to help with the down payment, closing costs, or both.

Programs differ from place to place, so this guide focuses on how they work, who usually qualifies, where to look, and what to read carefully before you sign.

Where Down Payment Help Comes From

Most assistance is run by state housing finance agencies, cities and counties, and local nonprofits. HUD funds many of these efforts, but it does not give down payment grants directly to individual buyers, and FHA does not lend money to homebuyers. Instead, HUD points buyers to state and local programs.

That is worth remembering: if someone promises you a “federal grant” in exchange for a fee, check with your state housing finance agency before you pay anything.

Types of Help You May Find

• Grants. Money you generally do not repay, though conditions such as living in the home may apply.
• Forgivable second loans. A second mortgage forgiven over time if you keep living in the home for the required period.
• Deferred-payment second loans. No monthly payment, but you repay the balance when you sell, refinance, or pay off your first mortgage.
• Low-interest second mortgages. Repaid in monthly installments alongside your main mortgage.
• Matched savings programs. Some nonprofits match what you save toward a home, often with financial coaching.
• Employer assistance. Some employers offer homebuying benefits, and FHA loans and Freddie Mac’s Home Possible accept employer help as a source of funds.
• Federal Home Loan Bank grants. Offered through participating local banks and credit unions to households earning up to 80% of the area median income, with counseling required for first-time buyers.
• Mortgage credit certificates (MCCs). Issued by some state and local governments, an MCC lets you claim a federal tax credit each year for part of the mortgage interest you pay. You must apply before you get the mortgage.

Who Usually Qualifies

Every program sets its own rules, but these requirements come up often:

• First-time buyer status. Many programs use a definition like HUD’s: you and your spouse have not owned a home in the past three years. Single parents and displaced homemakers who owned a home only with a spouse may still count, and some programs do not require first-time status at all.
• Income and price limits, often tied to the area median income for your county.
• Living in the home as your primary residence, not a rental or second home.
• Homebuyer education. Many programs require a course, and some accept only courses from HUD-approved housing counseling agencies.
• Credit and debt rules set by the program and by your main mortgage lender.
• A contribution of your own, in some programs, even if it is small.

Where to Look

1. Your state housing finance agency. Many offer assistance paired with their own first mortgage programs.
2. City and county housing offices. Local programs can be smaller but may target specific neighborhoods.
3. HUD’s homebuying resources. HUD’s Buying a Home page links to state and local assistance programs.
4. A HUD-approved housing counselor. Counselors know local programs and often help at little or no cost. Find one with the CFPB’s housing counselor search.
5. Lenders and credit unions. You usually must use a lender approved for the program.
6. Your employer. Check your benefits or ask human resources.

If you are a teacher, law enforcement officer, firefighter, or emergency medical technician, also read about HUD’s Good Neighbor Next Door program.

How Assistance Works With Your Mortgage

Down payment help sits on top of a first mortgage, so the loan you choose matters. Ask lenders about these options:

• FHA loans allow down payments as low as 3.5%, though some borrowers with lower credit scores need more. Gifts from family, employers, or charitable organizations are allowed, and FHA points buyers to state and local assistance.
• Conventional low down payment loans. Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% down for borrowers earning up to 80% of the area median income. Freddie Mac’s HomeOne allows 3% down for first-time buyers with no income limit. With an approved assistance second mortgage, called a Community Seconds or Affordable Seconds loan, combined financing can reach 105% of the home’s value.
• VA loans often require no down payment for eligible borrowers if the price is not above the appraised value.
• USDA guaranteed loans offer 100% financing in eligible rural areas for households within USDA’s income limits.

Even with a zero-down loan, assistance can help with closing costs. If your credit needs work first, start with our guide to owning a home with bad credit.

Read the Fine Print Before You Sign

Assistance comes with conditions. Get the terms in writing and ask:

• When would I repay it? Many second loans come due if you sell, refinance, or move out, and forgivable loans may be only partly forgiven if you leave early.
• Is there a recapture tax? If you buy with an MCC and sell within nine years, you may have to repay part of the federal benefit. Similar rules can apply to some loans funded by tax-exempt bonds.
• Does it change my main loan? Ask whether the program affects your first mortgage’s rate or fees, and compare Loan Estimates with and without it.
• Are there resale or sharing rules? Some programs limit who you can sell to or share in your home’s future value.
• Is money still available? Program funds can run out, and some must be reserved before closing.

Steps to Apply

1. Check your credit and choose a monthly payment you are comfortable with. Our 12-month plan for renters walks through it.
2. Take a homebuyer education course your program accepts.
3. List the programs you may qualify for, with their income and price limits.
4. Find a participating lender and get pre-approved with the assistance included.
5. Gather pay stubs, tax returns, bank statements, and ID.
6. Shop within the program’s price limit, and keep its timeline in mind when you sign a contract.
7. Before closing, read the assistance documents carefully, and ask a housing counselor or attorney about anything unclear.

The Bottom Line

Down payment assistance can shorten the road to owning, as long as you understand the strings attached. Start with your state housing finance agency and a HUD-approved counselor, compare offers, and pick a program that fits how long you plan to stay.

While you line up financing, MyHomeZilla can help you shop. Save a search with a price range that fits your program’s limits, get email notifications when new government-owned homes, foreclosures, private listings, or rent-to-own homes match, and compare homes side by side. MyHomeZilla is not a lender or a government agency and does not decide eligibility for any program, so confirm every detail with the program and your lender.