Down Payment Assistance

Down payment assistance, or DPA, helps with the cash you need up front. It usually comes as a grant or as a second loan at a low or zero interest rate. You can use it for the down payment, the closing costs, or both.

State and city housing agencies, counties and some non-profits run these programs, so what’s available depends on where you’re buying. Most have an income limit, and many are only for first-time buyers. In most programs, that means someone who hasn’t owned a home in the past three years.

Assistance doesn’t replace a mortgage. It goes alongside one. You still apply for a conventional, FHA, VA or USDA loan, and the assistance is applied at closing.

Assistance usually comes in one of three forms.

• A grant, which you don’t have to pay back.
• A forgivable second loan, which is written off once you’ve lived in the home for a set number of years.
• A deferred second loan, which you pay back when you sell the home, refinance, or pay off the first mortgage.

Most programs also ask you to take a short homebuyer education course, and the home has to be your primary residence. Terms and funding change often, and popular programs can run out of money for the year. Find out what’s open before you start looking.