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Guide to Down Payment Assistance: Your Ultimate Resource

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    Down payment assistance is a strangely well-kept secret considering it’s literally upfront money to help you buy your home. Who wouldn’t want that?

    With down payment assistance (DPA), home buyers — especially lower-income and first-time home buyers — can access grants, loans, or tax credit programs that make it easier to buy a home without taking on as much debt. 

    In this way, DPA allows first-time home buyers to speed up the rate at which they become homeowners. Making home ownership more affordable (and especially more accessible) is the goal of these programs. 

    If you don’t know much about down payment assistance, you aren’t alone. 

    It can be challenging to find these programs and even more challenging to get accurate information about them. That’s why a big part of our mission at Stairs is to help make down payment assistance programs more easily accessible and affordable for today’s first-time home buyers. 

    To help clear up the confusion about DPA, we’ve created this comprehensive guide to down payment assistance. You’ll learn what down payment assistance really is, the types that exist, how to find and use it, and what to look out for along the way.

    Find up to $15,000 towards a home 🏠

    Compare local down payment assistance and find a mortgage, fast.

    Where do you want to buy?
      Search by ZIP code, address, city, county, or neighborhood

      Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

      What is down payment assistance?

      Down payment assistance, also known as DPA, is an umbrella term for the vast catalog of programs that help first-time home buyers qualify for home ownership. These programs offer financial assistance in the form of given or borrowed funds that are exclusively intended for the initial costs of purchasing a home. 

      These are called down payment assistance programs, so you might expect them to only be used for a down payment on a house. However, some programs let home buyers use the funds for closing costs or other initial/upfront costs of purchasing a home. 

      This flexibility empowers buyers without enough immediate savings to enter the home-buying process. 

      We like to call it “free” money, but it’s important to note that down payment assistance is not really free money. The money you receive from these programs comes in the form of loans or grants which get repaid over time, either with interest or through taxes. 

      The creators of down payment assistance programs are: 

      • Government entities (federal, state, and local) 
      • Mortgage lenders 
      • Nonprofit organizations. 

      Because of the variety of programs (due to the varying sources), each program has its own restrictions and criteria to be met in order to qualify. 

      The resources currently available surrounding down payment assistance can make these programs seem enshrouded with red tape. That doesn’t have to be the case. With a little knowledge under your belt, most of these programs are pretty straightforward.

      Your first home is within reach

      With Stairs, you can see which down payment assistance programs you qualify for, compare programs and competitive mortgage rates side-by-side, and connect with an experienced loan officer to help you take the first step toward home ownership — all in one place. 

      Learn more about your down payment assistance options and find out how easy it can be to get the help you need to buy with confidence.

      How does down payment assistance work?

      Down payment assistance originates from either a government institution, a banking institution, or a nonprofit organization. Home buyers typically apply for these programs with the help of their mortgage lender. This process is usually done in conjunction with the mortgage loan application. 

      Finding a lender that is familiar with down payment assistance programs in your area will make your application process much smoother. Though all lenders should be capable of finding and accessing DPA programs on your behalf, it’s also important to do your own research. 

      Lenders might have the advantage of understanding down payment assistance programs since they live in the home-buying world day-to-day, but you are an expert on your own needs. 

      We highly recommend using a resource like Stairs to look up the options for down payment assistance in your area. Gather a list of the programs for which you qualify, and bring this list to your first meeting with your mortgage lender. 

      Together, you and your lender can work towards creating a home-buying financial plan that achieves your dreams of home ownership.

      Types of down payment assistance

      There are thousands of down payment assistance options available across the country. These programs can be offered by the state, by your city, by your county, or by a local lender or nonprofit. Sometimes nationwide lenders also have down payment assistance, as well as national nonprofits. There are several federal grant options, too.

      No matter where it comes from, down payment assistance provides opportunities for you, as a first time home buyer, to make homeownership more affordable and accessible. 

      Let’s go through all of the types of down payment assistance you might encounter.


      A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

      When using a grant, there’s no interest attached to the money you’re given, and you aren’t required to pay it back. That being said, there may be a contingency clause.

      There are two types of contingency clauses related to down payment assistance grants.

      Longevity contingency 

      The first possibility is a longevity contingency. With a longevity contingency, to access and maintain the grant you must live in the home and maintain the same mortgage (i.e. don’t sell, move, or refinance) for a specific period of time. Typically, this is around 5 years, but contingencies can be up to 20 years.

      Interest rate contingency 

      There may also be an interest rate contingency. IN this case, to access the grant you are required to pay an interest rate on the home mortgage that is higher than what you might qualify for without using a down payment assistance grant. 

      For example: 

      • You may qualify for an interest rate of 6.5% without a grant. 
      • If you use a grant, you may be locked in at a 7.5% interest rate.

      Grants can be an effective tool to boost your down payment and speed up your home purchase timeline. Each grant has different requirements, so be sure to ask about any contingencies to stay informed.

      Low-interest loans

      Low-interest loans are another down payment assistance option that provides you with an alternative to traditional mortgage financing. These loans have lower interest rates than you would get with a traditional lender. 

      Depending on the financing entity, these can sometimes be combined with additional down payment assistance, such as grants or forgivable loans (continue reading below to learn more about these).

      The length of these loans follows a traditional 30-year mortgage and does have down payment requirements in order to qualify. Programs vary, but occasionally they require a minimum cash contribution, which would come directly from the pocket of the homebuyer. 

      Low-interest loans can be subject to private mortgage insurance requirements if the 20% down payment isn’t met. If you use this type of loan, you might also have to meet certain eligibility and property requirements. (Skip ahead to “How Do I Qualify for Down Payment Assistance?” to learn more.)

      Down payment / second mortgage loans

      A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify.

      This type of assistance is a simultaneous loan in addition to your primary or first mortgage. It can be acquired at a lower interest rate compared to a traditional mortgage loan. 

      These loans exist tangentially with your original mortgage. As such, you must pay concurrently on both loans. However, these lower-interest loans often have more flexible repayment terms and can be easier to access for people with lower incomes.

      A note about down payment loans and home buying power

      Because it’s a loan, this type of down payment assistance increases your debt-to-income ratio and can therefore decrease your home buying power. Meaning if you want to buy a home for $300,000, but you take out a down payment assistance loan to cover the down payment of 20%, your purchase power will decrease accordingly. 


      As with most down payment assistance, there are also contingencies attached. In the case of low-interest second mortgage loans, you may be required to repay the loan in full once you sell, move, or refinance, or once your income increases over a specific threshold.

      Deferred-payment loans

      These loans are down payment assistance or second mortgage loans similar to the ones discussed above. However, in this case the repayment period has a contingency dictated by your ownership of the home. 

      In other words, if you move, sell, or refinance, (basically anything that would free you from your original mortgage), you are then required to repay the deferred down payment assistance loan. 

      A deferred-payment loan often comes with 0% interest, but some do have interest attached. Lending institutions expect the repayment of these loans to come from the equity you earn in the home through long-term repayment and home price appreciation.

      These loans remain with your home until both the original mortgage and deferred payment loan have been repaid (often this happens simultaneously, such as with a sale). That doesn’t mean that you can’t repay the loan until you sell, move, or refinance the home. 

      If you’d like to pay it off early, that is an option. However, there may be an early repayment contingency, so you’ll need to verify this with your lender.

      Forgivable loans

      Forgivable loans are down payment assistance loans or second mortgage loans but with a forgiveness contingency. 

      Interest rates on forgivable loans can be low, or even 0%, and the loan forgiveness is based on the amount of time you stay in the home. Each loan has its own requirements, but an average requirement is 5-10 years (though every loan is different and some have requirements of up to 20 years).

      Here’s what we mean by this: 

      Say you buy a house and use a forgivable loan to put 3% down. The contingency states that if you remain in the home for the 10-year term, that entire 3% will be forgiven. If you need to move from that home before the 10-year term is up, you’ll be required to repay the 3% loan, plus any interest that may be charged for breaching the contingency clause. 

      Closing cost assistance

      Closing cost assistance comes in two forms: closing cost credits and applicable funds. 

      Closing cost credits 

      Closing cost credits are a negotiation tool for the home purchase process. The sellers of a home can provide credits to the buyer to help alleviate the burden of closing. Lenders can also offer closing cost credits to help reduce the cash needed to close on a home.

      Applicable funds

      Applicable funds is a blanket term that refers to down payment assistance (such as loans or grants) that has the flexibility to also be used to apply towards closing costs. 

      For example, if you receive a grant for $5,000 and you don’t need it for your down payment, you can use these funds for your closing costs, should that specific program allow for it. All programs are different, and they may not have this flexibility, so check with your lender first.

      Interest rate reductions

      An interest rate reduction can come in the form of an automatic reduction from your lender when you meet certain criteria. 

      One such program is the FHFA First-Time Home Buyer Mortgage Rate Discount. This discount is applied automatically for home buyers who meet the following requirements:

      • First-time home buyer
      • Buying with a conventional loan
      • Using the home as a primary residence
      • Moving into the home within 60 days of closing 
      • Classified as a low-middle income wage earner for your area

      The discount comes in the form of a 1.75% point reduction to the conventional mortgage interest rate. It’s sponsored by Fannie Mae and Freddie Mac as a way to make home-buying more affordable with the current landscape of interest rates. 

      Other programs exist that have similar reductions with corresponding criteria, depending on the area where you are buying and/or the loan type you are using. 

      Property tax bill credits

      Property tax bill credits aren’t exactly a down payment assistance program, but they do allow homeowners to receive a reduction in the amount they owe on their property taxes at the time of closing. Property tax bill credits come from a lot of the same down payment assistance entities. 

      These programs originate through a government sponsor (you know, the people we pay taxes to). This sponsor then provides either a lump sum of money or monthly credits toward the homeowner’s property tax bill. 

      Some programs offer credits of up to 25% of the total property tax owed by an eligible homeowner. Others can offer as low as 10%.

      As with all down payment assistance, in order to receive a property bill tax credit, you must meet the eligibility criteria. For property tax bill credits, this can be income level, homeownership status, creditworthiness, and especially location (a very tax-specific criteria). 

      When you’re ready to close on your home, the tax credit then becomes part of the total amount due at closing. Again, this amount varies based on your qualifying factors, but it is another option to reduce your upfront home purchase costs.

      Matched savings programs

      A matched savings program is exactly what it sounds like. 

      With a matched savings program, future homebuyers are encouraged to save into a designated savings account for their inevitable home purchase. Homebuyers contribute to this account for a pre-designated period of time. At the end of this period, their savings account balance is *matched* with the original savings amount—essentially doubling the homeowner’s original investment.

      This program helps lower wage earners or households with fewer resources access greater down payment savings in a reduced time frame and with a greater contribution. The entities doing the account matching will be government agencies, nonprofits, or private groups. 

      You’re sure to be tired of hearing it by now, but we’ll say it again: there are additional requirements to qualify, such as income and credit score. Matched savings programs also often require you to enroll in a financial literacy or home buying education program.

      Pro tip: You can qualify as a first-time home buyer more than once. For the purposes of down payment assistance, “first-time home buyer” means not owning a home for the past three years.

      How to get down payment assistance

      Using down payment assistance programs is a great way for first-time homebuyers to access the additional funds they need to fulfill their dream of homeownership. There are a lot of down payment assistance programs out there (over 2,000), but how do you actually get down payment assistance?

      Your lender will be the biggest help in this department. Lenders work on home loans all day long, so they are familiar with down payment assistance programs and can help you find, apply, and access those funds.

      Step 1: Research your options

      There are a number of down payment assistance options out there, especially for first-time home buyers. It’s important to do your research so you can understand all the programs you qualify for and make the best choice for your circumstances. 
      Use Stairs to easily find out all the programs for which you qualify and compare those programs side-by side.

      Step 2: Apply through a knowledgeable lender

      The application process for down payment assistance is typically done at the same time you apply for your home loan. Finding a lender that is familiar with your situation and with programs available for your buying area is key to getting down payment assistance. 

      If you need a great lender, we know a guy! Stairs has partnerships with mortgage lenders who specialize in down payment assistance. In addition to learning about your down payment assistance options, you’ll receive information on local, knowledgeable lenders to help get you started on the path toward home ownership.

      Step 3: Wait for approvals

      Waiting for your approval will feel a lot like twiddling your thumbs. You’ll wait eagerly by the phone to see that text or email from your lender confirming you’re approved.

      Step 4: Access funds

      Depending on the type of program you’re using, the funds will either be immediately accessible for your down payment, applied to the specific loan, or attached to closing costs at the end of your home-buying journey.

      Step 5: Close on your home

      You did it. Your perseverance has paid off and you are a homeowner. Congrats! At closing, if you have down payment assistance that is being applied, you’ll be able to see that detailed on your closing disclosure.

      How to qualify for down payment assistance

      There’s an enormous library of down payment assistance options that you might qualify for. How to qualify for a specific down payment assistance program depends on the program’s eligibility requirements. 

      These programs are created by a variety of sponsors, and even if they are created by the same entity, each specific program may have different requirements. To ensure you qualify, read through the application carefully and consult the program or your lender if you have any additional questions. 

      But generally speaking, as you look at how to qualify for down payment assistance, take these factors into consideration:

      Understand the maximum income limits

      To qualify for down payment assistance, your income often needs to be at or below the area median income (AMI).

      Know your credit score

      Your credit score needs to be high enough to qualify for the program. There’s often a credit floor and no ceiling.

      Find a program that serves your area

      Down payment assistance programs are very location specific and as such require that the location of your home purchase is within the boundaries of the program. This probably goes without saying, but program location is one of the first things you should verify before moving forward in the process. 

      Access the right type of loan

      Some assistance programs have strict requirements on the type of mortgage loan you can use, such as only using an FHA loan or a conventional loan. This is an area where it is extremely helpful to work with a lender knowledgeable about your specific program.

      Keep an eye on the timeline 

      Many down payment assistance programs have a contingency that states you must close within a specific time frame in order to receive the assistance.

      Pay attention to other qualifying factors

      There are several other qualifying factors to keep in mind before you qualify for down payment assistance. 

      First-time homebuyer status 

      Being a first-time home buyer is a prerequisite for many of these programs. Did you know that the definition of a first-time home buyer means not owning a home for 3 years? This means that you could requalify as a first-time home buyer, even if *technically* it wasn’t your first home purchase.

      Homebuyer education courses

      Sometimes programs require you to take a specific course related to the home buying process or financial literacy. Financial literacy courses are especially common for matched savings account programs. 

      Primary residence requirement

      As these programs are intended to help people buy homes, they are almost always contingent on the home being used for a primary residency, and not any type of investment property.

      Family size

      Family size can dictate your eligibility for a down payment assistance program. You may need to verify that anyone living in the home is a direct relative and not multigenerational family members.

      Once you’ve identified a program, you can talk with your mortgage lender to begin the application process. Your lender will use a lot of the same information they used during your mortgage qualification process, and they can help walk you through down payment assistance qualification.

      What credit score is needed for down payment assistance?

      The credit score needed for down payment assistance varies depending on the lender and program. Generally, lenders require a minimum credit score of 620 or higher to be eligible for a loan, but some programs may allow borrowers with lower scores to qualify (such as 580). Some requirements are as high as 640.

      In addition to looking at credit score, lenders also take into consideration other factors like employment stability and debt-to-income ratio. Your income must also meet certain requirements in order to qualify for down payment assistance.

      Ultimately, it’s important to speak with a qualified lender or housing counselor who can help you find an assistance program that meets your needs.

      What is the income limit for down payment assistance? 

      The income limit for down payment assistance varies depending on the program and area. Generally speaking, most programs have a maximum income limit that cannot exceed 80-100% of the median income in the local area. This is called the area median income, and you’ll see it abbreviated as AMI. 

      Area median income is determined by the U.S. Department of Housing and Urban Development (HUD) and changes based on current data. AMI is also variable based on the size of your household.

      For example:

      • In California, because of its size, the AMI is broken up by region or county 
      • In Fresno, a 4 person household has an AMI of $80,300
      • 80% of that AMI = $64,240 

      What this means is that you would need to make $64,240 or less in order to qualify for down payment assistance for certain programs within Fresno County in California.

      Additionally, some programs may have additional requirements or limits based on factors like employment status or financial need. It’s important to check with the relevant program to ensure you qualify before applying for down payment assistance.

      How much down payment assistance can I get?

      The amount of down payment assistance you receive depends on a number of factors such as your income level, the lender you use, and especially which down payment assistance program you qualify for. Generally speaking, down payment assistance programs offer up to 5% of the purchase price of the home in assistance.

      An example of how much down payment assistance you can receive:

      If you buy a home worth $350,000, you could receive 5% of that purchase price. This would amount to $17,500 in financial assistance.

      Remember that these amounts are variable and very location specific. The down payment assistance you qualify for will be dictated by your specific buying profile and eligibility. Refer to the section in this guide on how to qualify for down payment assistance to better understand the factors that determine your eligibility.

      It’s important to check with the relevant program or lender to find out the exact amount of assistance that you are eligible for. Also, be sure to ask if the programs that you qualify for are stackable. Sometimes you can use more than one program simultaneously, which can greatly increase your assistance.

      How to apply for down payment assistance

      Once you’ve chosen the best down payment assistance program for you specific circumstances, follow these steps to apply.

      Find a lender

      The first step to down payment assistance is finding a lender. They will help you understand your financial situation as it pertains to buying a house and guide you toward the down payment assistance programs that you qualify for, in the areas you want to buy. 

      However, you are also able to research down payment assistance programs yourself and bring a list of programs to the lender of your choosing. You can do some of the work upfront and have a lender help you with finalizing the process. Ultimately, either of these options works, with the ultimate goal of acquiring down payment assistance that’s right for you. 

      There are a few reliable places where you can find this information:


      HUD has a great list of local homebuying programs to get you started. 


      As we’ve mentioned before, Stairs has an easy-to-use, comprehensive database of down payment assistance programs. Search for programs in your area, compare down payment assistance programs side-by-side, and get a list of qualified lenders to help you take the next step.


      Some larger lenders will display their down payment assistance options on their pages. You can check with your existing bank and see what they may offer.


      You can sometimes find new programs getting newsworthy acclaim. It can be a good opportunity to review these programs when they’re first released as lenders may not be as familiar. 

      Reading about the programs that are available will help you get a better understanding of the type of help that exists and how you’ll be able to access it. Factors such as area median income and local purchase limits will be vital to your search.

      Gather your documents and apply

      Your lender will help you through the application process, including prompting you to gather all the necessary documentation. Your mortgage loan application and down payment assistance application will be done at the same time, as they often require the same documentation. 

      Two birds, one stone kind of thing. There are a lot of applications and paperwork in the home-buying process, and accessing down payment assistance is no different. 

      An important note: Even though you typically apply at the same time, receiving down payment assistance can be a separate process from qualifying for your mortgage loan.  Plan your time accordingly. 

      Using down payment assistance involves more parties than a typical home purchase since your purchase will be financed through additional entities. Sometimes this can extend typical closing times on a house. It may also require you to use a specific loan type, such as an FHA loan. 

      Each program will have a list of the criteria that you will find on its website. If you have questions, you can contact their helpline or try reaching out to a housing counselor through HUD to get assistance with the process.

      Follow the instructions after approval

      Once you’re approved, you’ll have a better understanding of the areas in which you can buy a house, what type of loan you may be required to use, and what steps of the process you’ll need to relay back to the group providing your assistance. 

      For example: Just like with a typical mortgage, down payment assistance may be contingent on the appraisal or inspection, so you’ll need to be aware of these contingencies and have all parties be involved with every step of your contract process to buy the house.

      Once you receive the green light on the home contract, you’ll be able to progress to closing.

      Close on your new home

      After each party has approved of the home you want to buy and you’ve crossed all the t’s and dotted the i’s on your purchase contract, it’s time to close. 

      You’ll be provided with a closing disclosure which indicates where your down payment or closing cost or other assistance funds are coming from. They’ll have their own, clearly visible  line on the closing documents. 

      That money will then be wired directly to the entity that is providing the loan, and you’ll have a record of that transaction on your documentation.

      The down payment assistance process adds an extra layer of work to your home-buying journey, which can already seem exhausting. Knowing the steps ahead of time helps you prepare to undergo each step when you’re ready.

      What banks offer down payment assistance? 

      Many US banks offer down payment assistance to qualified applicants. This includes national banks such as: Bank of America, Wells Fargo, JPMorgan Chase, PNC Bank, and U.S. Bank. Local banks and credit unions also have their own programs for down payment assistance and can be considered during your search. 

      These banks sponsor their own programs and generally provide qualified applicants with special interest rates or lender credits devoted to your down payment or other applicable housing expenses. Each bank will be different based on the program used and the area in which you are applying. Be sure to research your options thoroughly.

      Beyond banks: Other entities that can help you apply 

      Outside of banks offering their own down payment assistance, most banks, non-bank lenders, and credit unions can help you access DPA, even if they aren’t the originator of the program. They can help you apply for existing government grants, special DPA loans, and a whole host of available down payment assistance programs. 

      Government agencies

      Government agencies have the specifics on which lenders may have access to certain down payment assistance programs. They’ll be able to provide you with additional resources and advice as to which lenders can sponsor the programs.

      Non-profit organizations 

      Many nonprofit agencies also work with certain lenders to sponsor loans that work within their programs. You can contact the nonprofit program sponsors for a list of eligible lenders.

      For a more comprehensive list to compare all your down payment assistance options, as well as qualifying lenders in your area, you can use Stairs.

      How long does it take to get down payment assistance?

      The amount of time it takes to actually get down payment assistance varies depending on the specific program you’re using, how quick your lender is at responding, how organized you are with your paperwork, as well as what time of year and the location in which you’re trying to buy in.

      The best way to get approved as quickly as possible is to control what’s within your ability to control. This means staying on top of your paperwork. The better organized and responsive you are with your documents and your lender’s requests, the faster and clearer their submissions will be, and the smoother your application and approval process can run.

      Many lenders will have some familiarity with the program requirements that you’ll be interested in, but if you’ve done your own research, you can help them with any knowledge gaps they may have and work as a team to access your down payment assistance as quickly as possible.

      How to find down payment assistance programs near you

      Down payment assistance programs are everywhere. There are thousands of programs available and accessible.  Search online, look at the press, visit your local HUD office, talk with mortgage lenders, and reach out to mortgage brokers and your real estate agent. 

      But above all, start your research with Stairs Financial, the one place where you can easily compare all of your choices side-by-side, apples to apples.

      Stairs matches your information up with a huge database of loan options offered by trusted lenders. You get a targeted list of loans and any down payment assistance programs for which you qualify, making it easy to compare down payment assistance options.

      You also get access to knowledgeable lenders who understand the nuances of your specific down payment assistance program, so you can reduce the headaches of buying a home and ultimately get the most benefits possible.

      Learn more about your down payment assistance options and how Stairs Financial takes the confusion out of first-time homeownership.

      Find up to $15,000 towards a home 🏠

      Compare local down payment assistance and find a mortgage, fast.

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