Down Payment Assistance Programs: Free Money to Help You Buy a Home

What Are Down Payment Assistance Programs?

Down payment assistance (DPA) programs are grants, forgivable loans, or low-interest second mortgages offered by state housing agencies, local governments, nonprofits, and some employers to help buyers cover the upfront costs of purchasing a home. For many buyers, scraping together a 3–20% down payment is the single biggest obstacle — DPA programs exist specifically to remove that barrier.

According to the National Council of State Housing Agencies, there are more than 2,500 DPA programs across the United States, and billions of dollars go unclaimed each year simply because buyers do not know these programs exist. In 2025 alone, state housing finance agencies helped over 300,000 families access homeownership through assistance programs.

DPA programs are most commonly aimed at first-time homebuyers, though many define "first-time buyer" as anyone who has not owned a home in the past three years — meaning previous owners may qualify again.

Types of Down Payment Assistance

Not all assistance programs work the same way. Here are the main types you will encounter:

• Grants: Free money that does not have to be repaid. Grants typically range from $1,000 to $10,000, though some state programs offer more. They are the most desirable form of assistance but also the most competitive.
• Forgivable loans: Second mortgages that are forgiven — meaning you owe nothing — if you stay in the home for a set period, usually 5–10 years. If you sell before the forgiveness period ends, you must repay a prorated portion.
• Deferred payment loans: Zero-interest or low-interest loans that you do not repay until you sell, refinance, or pay off the first mortgage. These are not free money but ease the upfront cash burden significantly.
• Matched savings programs: Some nonprofits and employers match your savings dollar-for-dollar or up to a set limit. Save $2,000 and get $2,000–$6,000 in matching funds toward your down payment.

How to Find and Qualify for Programs

Eligibility requirements vary by program but commonly include income limits, purchase price limits, and a requirement to use an approved lender. Here is how to find programs available to you:

• HUD-approved housing counselors: Visit hud.gov to find free or low-cost housing counselors in your area. They know exactly which programs you qualify for.
• Your state's housing finance agency (HFA): Every state has one. Search "[your state] housing finance agency" to find programs, income limits, and approved lenders.
• Down Payment Resource: A free database at downpaymentresource.com that searches thousands of programs based on your location and income.
• Local community development organizations: Many cities and counties run their own programs, sometimes funded by federal Community Development Block Grants (CDBG).

Income limits are common. Many programs restrict eligibility to households earning 80–120% of the Area Median Income (AMI). For a family of four in a mid-sized city, 100% AMI might be $85,000–$110,000, making most working families eligible.

Real Examples of DPA Programs

To make this concrete, here are examples of programs available in 2026:

• California Dream For All: Offers a shared appreciation loan covering up to 20% of the purchase price. When you sell, you repay the loan plus 20% of the home's appreciation. No monthly payments while you live there.
• Texas State Affordable Housing Corporation (TSAHC): Offers 3–5% of the loan amount as a grant with no repayment required, paired with a 30-year fixed mortgage through approved lenders.
• FHA with DPA: Many state programs pair with FHA loans, so you can combine a 3.5% FHA loan with a grant covering exactly that 3.5%, allowing buyers to purchase with zero out-of-pocket for the down payment.
• Employer-Assisted Housing: Companies like hospitals, universities, and large employers in some cities offer $5,000–$20,000 in forgivable loans to employees who buy homes near their workplace.

Always compare the total cost of using DPA. Some programs pair with slightly higher mortgage rates. Run the numbers to ensure the assistance genuinely saves you money over your expected time in the home.