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Everything You Should Know About the Down Payment Assistance Programs

Daniele S. Gordon | December 28, 2022

You might think you can’t get a loan if you don’t have a 20% down payment. The good news is there are options to secure a loan, including programs with lower down payment requirements and down payment assistance programs.
Not everyone will qualify for a down payment assistance program. But, here’s what you should know.

What is a Down Payment Assistance Program?

There are many down payment assistance programs you can consider. Some are run by the federal or state governments and local charities, and some lenders offer them too.
The program may be a grant, meaning you don’t have to pay the money back, or it could be a second mortgage that you pay back in the future. To qualify, most borrowers must prove they’re buying a home as their primary residence and promise to live in the home for a certain amount of time.

Who Qualifies?

The government and charitable organizations offer down payment assistance to borrowers in need. Typically, the programs are available to borrowers with income below 80% of the area’s average income, but each program differs, with some states offering help for families with income as much as 120% over the area’s median income.
Some lenders will determine your eligibility on your credit score and debt-to-income ratio. They typically reserve the down payment assistance funds for borrowers they know will qualify for a loan.

How Much Can You Get?

Each down payment assistance program has a different amount of money it can fund. Some have a fixed amount, and when the funds are gone, they’re gone. Others have more funds available and base the assistance on your loan amount and financial need.

What if you Move?

If you get assistance from a fund that requires you to live in the home for a certain amount of time and you move early, you may have to pay the difference for the time you left early. If you stay in the home for the whole time, however, they will usually wipe the slate clean, meaning you don’t owe anything.

Questions to Ask

Before you accept down payment assistance, make sure you understand the terms. Must you pay it back? If so, on what terms? Is there a way to waive the payback requirement, such as if you live in the house for a certain amount of time?
Some programs are just grants. No one has to repay them, but they are harder to qualify for because they are based purely on need.

Final Thoughts

Don’t let a lack of a down payment stop you from buying a home. If you’re short the down payment, check out your options in your local community, state, and charitable organizations. There are many opportunities to get funding to help you buy a home, even if it’s just enough for the minimum down payment.
If you need help figuring out how to get your down payment assistance or you are ready to look at homes within your budget, contact me today.


My focus has been to assist my clients in making the best decision in one of the most important financial and emotional investments in their lives.

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