The 7 Best National Down Payment Assistance Programs for Buyers
You’re dreaming of buying a home, and you’ve already got your paint swatches and furniture all picked out. The only problem? You’re not sure you have enough funds for a down payment. Is there such a thing as down payment grants?
It’s a common challenge for buyers, especially those moving into homeownership for the first time. In fact, according to the National Association of Realtors (NAR) 2023 Profile of Home Buyers and Sellers, 38% of first-time buyers reported that saving for a down payment was the most challenging part of the homebuying process.
There are a lot of misconceptions around down payments that prevent would-be buyers from getting in the game. For example, almost half of Americans believe you need to put 15%-20% down on a home (not true!), when in reality, the typical down payment for first-time buyers is just 8%.
If you’re ready to buy a home but you don’t have a ton of money saved, you may be able to afford a larger down payment than you think — with a little help.
There are tons of programs out there to help buyers get into homes, from loans that offer down payments as low as 3%, to special grants for first-time buyers.
We talked to top real estate agent Claire Paris, who sells homes 46% faster than the average agent in Portland, Oregon, to walk us through what buyers can expect from down payment assistance programs and how you can find one in your area.
What’s down payment assistance, or a down payment grant?
Not every buyer has a huge stash of money saved up to buy a home. Though many loan programs go as low as 3% down, that’s still beyond the means of many homebuyers — especially those in hyper-competitive or expensive real estate markets.
Plus, for many Americans, it’s simply not feasible to wait to buy a home until they’ve saved up for a down payment.
Thankfully, there are tons of programs out there to help regular homebuyers achieve home ownership, even if they don’t have anywhere close to 20% saved up.
There are two main types of down payment assistance programs.
Down payment grants
Down payment grants are gifts that help you make a down payment on a home. These down payment assistance (DPA) grants tend to be issued on a local level, so you’ll need an experienced real estate team to help you track them down.
Many of these are matching programs, where the fund matches your savings 1:1, 2:1, 3:1, or in some cases, even 4:1 — typically, the matching will cap when your down payment reaches 20% of the home’s purchase price.
The best part about these down payment grants? They usually don’t need to be paid back if you follow all the program guidelines. Free money? Yes please!
Second mortgages
Another way you can get down payment assistance is by taking out a second mortgage. This might sound like a scary option, but hear us out!
Some of these DPA loans have deferred payments until you sell or refinance the home, and others are forgiven completely once you’ve lived in the home a certain number of years. Plus, many of these down payment-oriented second mortgages feature low- or no-interest options. So, if you plan to stay put for a bit, a second mortgage might be a solid option for you.
Many DPA programs can be used to cover closing costs, too, as that’s another large chunk of change you’ll owe at closing.
One other thing to note is that the majority of these programs are available on a local level. Though there are a few national options (we’ll get to those soon!), there are thousands of programs available at the state and local levels.
