Down payment assistance programs — including outright grants that never need to be repaid — exist in every state and many counties. Most bad credit buyers don't know these programs exist, or assume they won't qualify. This guide covers every major grant and assistance program, how to find state-specific programs, and what 'first-time buyer' actually means (hint: you may qualify even if you've owned before).
Every US state has at least one HFA-administered down payment assistance program
Maximum grant amount as percentage of purchase price in many programs
HUD housing counseling that identifies DPA programs for you — always free
Many 'first-time buyer' programs define first-time as 'no home ownership in past 3 years'
The legal definition surprises most people: under HUD and most state program definitions, a "first-time homebuyer" is someone who has not owned a primary residence in the past 3 years. This means:
True grants that do not need to be repaid as long as you remain in the home for a specified period (typically 3–10 years). If you sell or refinance before the forgiveness period ends, you repay a prorated portion. After the period ends — the money is yours, free and clear.
A second mortgage covering your down payment at 0% or low interest with no payments required until you sell, refinance, or pay off the first mortgage. Not a grant — you'll repay it eventually — but it eliminates the upfront cash burden of the down payment.
A second mortgage at below-market rates (0%–3%) requiring monthly payments. Less favorable than forgivable grants or deferred options, but still significantly cheaper than most alternatives. Typically offered when other program types are exhausted.
IDAs match your savings at 2:1 or 3:1 for first-time homebuyer down payments. Save $2,000, receive $4,000–$6,000 in matching funds. Programs are run by local nonprofits — find one through the CFED IDA directory.
Call 1-800-569-4287 to connect with a HUD-approved housing counselor in your area. Free service. The counselor identifies every state, local, employer, and nonprofit DPA program you qualify for — programs that aren't in any online database. This is the single most valuable call a first-time buyer can make.
Every state has a Housing Finance Agency (HFA) administering first-time buyer programs. Find your state's HFA at ncsha.org/housing-help. Most HFA programs combine a first mortgage (often FHA) with a DPA grant or second mortgage covering your down payment and sometimes closing costs.
Many cities and counties have their own DPA programs separate from state offerings — especially in areas targeting urban revitalization. Contact your city or county's housing or community development department. Some urban programs offer $10,000–$25,000 in forgivable grants for buying in targeted neighborhoods.
Many hospitals, universities, and large corporations offer homebuyer assistance to attract employees to nearby neighborhoods. Ask your HR department. Some employer programs provide $5,000–$20,000 in forgivable grants. This is one of the most underutilized sources of free down payment money.
| Program | Amount | Type | Works With | Income Limit |
|---|---|---|---|---|
| National Homebuyers Fund (NHF) | Up to 5% | Grant (no repayment) | FHA, VA, USDA | Varies by state |
| Good Neighbor Next Door (HUD) | 50% off! | Price discount | HUD-owned homes | Teachers, FD, EMT, police |
| Chenoa Fund | Up to 3.5% | Forgivable 2nd mortgage | FHA loans | 120% AMI max |
| HOME Investment Partnership | Varies | Deferred loan | Any loan | 80% AMI max |
| State HFA Programs | 2%–7% | Grant or soft 2nd | FHA/Conv | Varies by state |
1-800-569-4287. They identify all programs you qualify for, help prepare your application, and connect you with program-specific lenders. This 45-minute call can identify $5,000–$25,000 in assistance you didn't know existed.
DPA programs require lenders that are specifically approved to participate. Your HUD counselor can provide referrals. Using an unapproved lender means losing access to the program entirely.
Most DPA programs require a HUD-approved homebuyer education course (8 hours, typically online). Cost is $0–$75. Certificate is required for program disbursement. Take this early — some programs require it before pre-approval.
Your approved lender processes both your primary mortgage and the DPA second mortgage/grant as a package. At closing, the DPA funds are applied directly to your down payment — you don't receive the cash yourself.
It depends on the program type. True grants (like National Homebuyers Fund) never need to be repaid. Forgivable second mortgages are forgiven after you stay in the home for 3–10 years. Deferred loans are repaid when you sell or refinance. Always ask: is this a grant, a forgivable loan, or a deferred loan?
Yes — most DPA programs don't have separate credit score requirements beyond what the first mortgage requires. If you qualify for an FHA loan (580+), you typically qualify for the DPA programs paired with FHA loans. Call HUD at 1-800-569-4287 to find programs that work with your specific credit profile.
Under HUD's definition — used by most programs — a first-time homebuyer is someone who has not owned a primary residence in the past 3 years. This means previous homeowners who sold or lost their home more than 3 years ago can qualify as 'first-time buyers' for assistance purposes.
Amounts vary widely by program and location: from 2%–5% of purchase price in most state HFA programs, up to 50% price discount in HUD's Good Neighbor Next Door program, to $10,000–$25,000 in some urban revitalization grants. Call HUD counseling to identify your specific maximum.
Most DPA programs have income limits — typically 80%–120% of area median income. High earners may exceed program limits. However, some programs (like National Homebuyers Fund) have higher income limits. A HUD counselor can identify which programs you qualify for based on your actual income.
Know your true monthly cost before applying — our PITI calculator includes taxes, insurance, and mortgage insurance.
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⚠ Disclaimer: DPA program availability, amounts, and eligibility requirements change frequently. Contact a HUD-approved housing counselor (free at 1-800-569-4287) for current program information specific to your area. Not financial advice. See our Disclaimer and Privacy Policy.