For many first-time homebuyers, the big question isn’t “Do I want to own a home,” it’s “How can I afford a down payment?”
Maybe you’ve already created a budget for your mortgage payment. Or perhaps you’re still building your credit. Either way, it’s never too soon to start planning for the cash you’ll need at closing. And that’s where down payment assistance could help make buying a home more affordable.
What Is Down Payment Assistance?
Down payment assistance programs (DPAs) are a financing option that can provide eligible buyers with up to 5% of the original loan amount to put toward their upfront homebuying costs, including closing costs.
Common down payment assistance programs include:
- FHA Loans — Features down payment as low as 3.5% and more flexible income and credit requirements.
- VA Loans — Offers no down payment1 and no private mortgage insurance (PMI)2 for qualified military members, veterans, and military spouses.
- USDA Loans — Available in rural areas (as outlined by the USDA), these loans require no down payment.
- State-specific Down Payment Assistance Programs3
For buyers who feel financially ready to apply for a mortgage, but want to leave a little cushion in their savings, a DPA could create some flexibility in their homebuying budget.
Who Qualifies for Down Payment Assistance?
What does it actually take to qualify for down payment assistance? Many buyers are surprised to learn they may already meet the basic qualifications for down payment assistance. While guidelines differ by program, common factors may include:
- Income within local program limits
- Purchase of a primary residence
- Completion of a homebuyer education course
- Minimum credit score guidelines
Some programs also require buyers to contribute a portion of their own funds toward the purchase. And remember, DPA eligibility guidelines vary based on location, so be sure to talk with a loan officer who can help you navigate the best options for your needs and walk you through the difference between repayable and forgivable DPAs.
How Repayable Down Payment Assistance Works
Repayable down payment assistance programs allow the recipient to pay back the funds over a set amount of time. A repayable DPA is often structured as a second mortgage, also known as a second lien.
While repayable assistance does create an additional loan, the repayment terms are structured to be manageable alongside the primary mortgage. The repayment schedule will depend on the loan terms.
How Forgivable Downpayment Assistance Works
Forgivable down payment assistance programs are designed to reduce or eliminate repayment over time. With these programs, the assistance my not need to be repaid if certain conditions are met, such as:
- Living in the home as a primary residence
- Remaining in the property for a defined number of years
- Avoiding early sale or refinance
Typically, the forgiveness on these assistance programs happens gradually. For instance, a five-year forgiveness schedule may reduce the balance each year until it reaches zero. That said, if the home is sold or refinanced before the forgiveness period ends, the remaining balance may need to be repaid.
Making the Numbers Work While Keeping Savings Intact
If buying a home has been on the horizon but you were hesitating on the down payment, it may be time to start exploring your DPA options to make the upfront costs more manageable.
Both repayable and forgivable programs are designed to expand access to homeownership, each with its own structure and long-term considerations.
A personalized review can help answer key questions, including:
- What programs are available locally
- How much assistance may apply
- How repayment or forgiveness would work
- What the overall monthly payment impact could look like
Sometimes the biggest shift happens simply by seeing the numbers in context. Contact us today to see if you qualify for down payment assistance.
Product info as of 3/4/26, subject to change.
1Down payment waiver is based on VA eligibility.
2There is an upfront funding fee that takes the place of mortgage insurance.
3Certain restrictions apply, subject to down payment assistance program guidelines. Not available in all areas. Please contact your PrimeLending loan officer for more details.
