Down payment assistance programs come in a few different varieties, including grants, forgivable loans, deferred-payment loans and more. Check for eligible options on Zillow listings.
While conventional wisdom says that you need to save a 20 percent down payment to buy your first home, there are multiple programs designed to help with down payment assistance, which means you may be able to buy sooner than you think.
It takes hard work and dedication to save for a house, but you may be surprised to know that many first-time home buyers only put 3-5% of the home sale price down at closing, thanks to the help of first-time buyer programs. And, there are even a few zero-down payment options available.
What is down payment assistance?
Down payment assistance helps first-time home buyers come up with a down payment to purchase a home and begin building wealth through homeownership. Down payment assistance takes multiple forms, including loans, grants, vouchers and more. Assistance amounts can range from a few thousand to tens of thousands of dollars, and can be used toward closing cost assistance, and/or principal or down payment reductions.
What is a down payment assistance (DPA) program?
Down payment assistance (DPA) programs are loans and grants aimed at assisting homebuyers with their down payment expenses. Down payment assistance programs are offered by local or state housing authorities and non-profit organizations. They work in conjunction with loan programs like those offered by the Federal Housing Administration (FHA), where you can put as little as 3.5% down. They’re also compatible with VA, USDA, and conventional loan types. There are also lenders that specialize in down payment assistance programs who work with state or local housing agencies, or they may offer their own down payment assistance programs.
Down payment assistance eligibility requirements
To qualify for down payment assistance, you must have not owned a home in the past three years. You must also show proof of a credit score 620 or higher, a steady income, and a healthy debt-to-income ratio.
Individual programs may have more eligibility requirements, like that you must remain in the home for a specified period of time, ranging from as little as three years up to 10 years. Some programs are limited to certain geographic areas, which could affect your eligibility. You also may be required to take an educational course.
Can you qualify for more than one down payment assistance program?
Yes, it’s possible to qualify for more than one down payment assistance program. For example, FHA loans, which are popular with first-time buyers, can also be combined with a down payment assistance program, helping offset financial requirements about down payment and mortgage insurance premiums.