How to Get Down Payment Assistance [Step-by-Step Guide]

Did you know you might qualify for Down Payment Assistance (DPA)?

Yep, it’s 100% true.

Most programs currently offer DPA between 3% and 5% of the total loan amount.

In this article, we’ll explore what DPA programs are, how they work, and how you can qualify for them.

Let’s begin!

What Are Down Payment Assistance Programs?

DPA programs are initiatives offered through government bodies, nonprofits, and other private funding sources to help homebuyers cover the initial costs of purchasing a home.

These programs can significantly reduce the barrier to homeownership and are available in various forms, including:

Grants: Free money that you don’t have to repay.

Low-interest loans: These need to be repaid over time, but usually at a much lower interest rate than typical market rates.

Deferred payment loans: Loans that only need to be repaid when you sell, refinance, or pay off your primary mortgage.

Forgivable loans: Loans that can be forgiven over a set number of years, if the homeowner meets certain conditions.

Who Offers These Programs?

There are five main sources of DPA programs, including:

Federal Government: While the federal government does not directly provide DPA, it supports several programs that can facilitate homeownership.

State and Local Governments: Many states, counties, and cities offer DPA programs to promote homeownership within their jurisdictions.

Nonprofits and Charities: Some nonprofits and charitable organizations provide DPA to support low-to-moderate-income families in buying homes.

Housing Authorities: Local housing authorities often have programs, especially for first-time homebuyers or low-income families.

Private Programs: There are numerous private programs that can help homebuyer; a mortgage broker can help you find the right DPA for your situation.

Eligibility Criteria for Down Payment Assistance Programs

To make homeownership more accessible, DPA programs have specific eligibility criteria:

Credit Score Requirements: Most DPA programs require a minimum credit score of 620. Some DPA products require a minimum credit score of 660.

Income Limits: Eligibility often includes income thresholds, which vary by program and location. Some DPA products have no income limit.

Debt-to-Income Ratio (DTI): A favorable DTI is critical as it indicates your ability to manage monthly payments alongside existing debts. Sometimes you’ll see “Maximum DTI per AUS,” which refers to the DTI ratio allowed as determined by an Automated Underwriting System (AUS).

Minimum Loan-To-Value (LTV) Ratio of 90%: This means that the loan must cover at least 90% of the home’s value. So, if the home is worth $500,000, the loan should be at least $450,000. The buyer can put down a maximum of 10% as a down payment. This requirement varies by DPA program.

Property Location: Some programs require the home to be in a specific area, county, or community. District Lending offers DPA in 20 states, including:Arizona, California, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Maryland, Michigan, Minnesota, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, and Washington.

First-Time Homebuyer Status: DPA programs often prioritize first-time homebuyers, but not always. Our programs do not require you to be a first-time buyer.

How to Find Down Payment Assistance Programs

There are many ways to find down payment assistance:

Your state’s HFA: Every state runs an HFA that helps homeowners and renters. Contact your state’s HFA or visit its website to learn what down payment assistance options you might be eligible for.

Your city or county website: Many counties and cities offer down payment assistance. Check your municipality’s website for more.

HUD: Check the U.S. Department of Housing and Urban Development’s (HUD) website for local homebuying programs by state.

Your lender: Your loan officer can help point you to an assistance program. District Lending can help! Shoot us a note here. We answer all inquires within 2 business hours.

Can District Lending Help Me With Down Payment Assistance?

Yes, we can!

Here’s a few programs we currently offer for Down Payment Assistance:

Down Payment Assistance Programs: Frequently Asked Questions (FAQs):

1. Who is eligible for Down Payment Assistance?

Eligibility for DPA programs varies by the provider but typically includes criteria like income limits, first-time homebuyer status, and a minimum credit score. Some programs also require buyers to reside in the home as their primary residence and complete homeowner education courses.

2. What are the typical qualifications for Down Payment Assistance?

To qualify for most down payment assistance programs, applicants generally need to meet certain financial and demographic criteria:

A minimum credit score, often around 620.
Income limits that align with the program’s thresholds.
A favorable debt-to-income (DTI) ratio.
Minimum loan-to-value (LTV) ratio, often 90%.
Purchasing a home within a designated state or county.
Some programs require you to be a first-time homebuyer.

3. How can I find Down Payment Assistance programs in my area?

Start by checking with your state or local housing authority, visiting HUD’s website by state, or consulting non-profit organizations that specialize in housing assistance. Many regions have unique programs tailored to the needs of their communities. You can also check with mortgage brokers who have access to various down payment assistance loan products.

4. What types of Down Payment Assistance programs are available?

The main types include:

Grants: Non-repayable funds provided to homebuyers.
Forgivable Loans: Loans that are forgiven if the homeowner meets certain conditions over a set period.
Deferred-Payment Loans: Loans where repayment is deferred until the home is sold, refinanced, or the mortgage is paid off.
Low-Interest Loans: Loans offered at below-market interest rates to help with down payments.
Matched Savings Programs: Programs that match the savings a homebuyer contributes towards a down payment.

5. Can I combine Down Payment Assistance with an FHA loan?

While the Federal Housing Administration (FHA) does not directly offer down payment assistance, many FHA loan borrowers successfully use DPA programs to cover part of their down payments. It’s important to note that assistance with closing costs on FHA loans is limited to 3-5% of the home price. Most down payment assistance programs are compatible with FHA loans, but you’ll need to contribute a portion of the down payment from your own funds.

6. Are there specific Down Payment Assistance programs for veterans?

Yes, many states and organizations offer DPA programs specifically for veterans and active military members. These programs often have favorable terms, such as lower interest rates or additional benefits, recognizing the service of military personnel.

7. Can Down Payment Assistance be combined with other homebuyer programs?

Yes, in many cases, DPA funds can be combined with other types of homebuyer assistance programs, such as FHA loans, to further reduce upfront costs. However, always check the specific rules and conditions of each program.

8. How do I apply for Down Payment Assistance?

To apply for down payment assistance, begin by researching available programs in your locality. Check with HUD for a list of state-specific home buying programs, and explore city and county websites for additional opportunities. These sources will provide details on application procedures. It’s advisable to contact the programs directly through email or phone for any specific queries not addressed online. Also, ensure that your mortgage lender is compatible with and accepts the DPA program you’re considering.

9. What are the steps to apply for a Down Payment Assistance program?

Generally, you’ll need to:

Research available programs and their requirements.
Gather necessary documentation, such as proof of income, residency, and credit history.
Complete any required homeowner education courses.
Apply through the program’s designated process, which may involve online applications or through approved lenders.

10. How long does it typically take to receive Down Payment Assistance?

The timeline for receiving down payment assistance can vary significantly depending on the specific program and its administering agency, be it a state, city, or nonprofit organization. Factors that can affect this timeline include the program’s funding availability, demand, and administrative efficiency. It’s best to inquire directly with the program for an estimated timeframe.

11. Does Down Payment Assistance affect the timeline for closing on a home?

Yes, obtaining down payment assistance can potentially extend your home closing process. Since these programs involve coordination between your lender and the assistance provider to secure the necessary funds, additional time may be required. The degree to which this impacts your closing timeline will depend on the responsiveness and procedural requirements of the assistance program.

12. Do I need to repay Down Payment Assistance funds?

It depends on the type of assistance. Grants do not need to be repaid, but loans may need to be repaid if certain conditions aren’t met, such as living in the home for a designated period for forgivable loans.

13. What should I watch out for when applying for Down Payment Assistance?

Be cautious of the terms and conditions associated with the assistance. Some “grants” might require repayment under certain circumstances, and loans might have conditions tied to your residency in the home.

14. How does Down Payment Assistance affect my mortgage and long-term financial planning?

While DPA can reduce your initial financial burden, it’s important to consider how it integrates with your overall mortgage structure. Depending on the type of assistance, it could affect your loan-to-value ratio, mortgage insurance requirements, and overall debt obligations.

Looking for the Best Down Payment Assistance? WE CAN HELP!

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>> Click HERE to get a down payment assistance quote in 60 seconds or less!

Questions About Down Payment Assistance?

You’ve got questions…

We’ve got expert answers!

If you have questions about down payment assistance eligibility, you can get in touch with us HERE.

*We respond to all inquiries within 2 business hours.

About the Author

Brian Reese is a senior advisor and co-owner at District Lending. He is one of the world’s leading experts in veteran benefits, having helped millions of veterans secure their financial future since 2013. Brian is the founder VA Claims Insider, an education-based Coaching & Consulting company whose mission is to educate and empower veterans to get the VA disability benefits they’ve earned for their honorable service. A former active-duty air force officer, Brian deployed to Afghanistan in support of Operation Enduring Freedom. He is a distinguished graduate of management of the United States Air Force Academy and earned his MBA as a National Honor Scholar from the Spears School of Business at Oklahoma State University.

“As a military veteran, I’ve made it my life’s mission to help people live happier and wealthier lives. District Lending brings this mission to life. We believe in integrity, honesty, and transparency, which is why you’ll see our rates right on our website. You’ll find lower rates and zero lending fees, which means you can buy your dream home for less. The savings are passed on to you — the way it should be.”

– Brian Reese, Advisor and Co-Owner, District Lending

Feature	5-Year Forgivable DPA	30/10 Repayable Option DPA	Closing Cost Assistance: Repayable Option
General Description	Down payment assistance (DPA) program requiring the delivery of the underlying 30-year FHA or USDA loan with the subordinated second lien. The second lien is fully forgiven after 5 years if the borrower meets criteria.	Down payment assistance (DPA) program with a repayable second lien. The second is not forgivable and is originated with a 30-year term due in a 10-year balloon.	Closing cost assistance (CCA) program with a repayable second lien. The second is not forgivable and is originated with a 30-year term due in a 10-year balloon.
Assistance Amounts	3.5%	3.5% and 5.0%	3%, 4%, or 5%
Eligible Channels	Wholesale and Non-Delegated Correspondent	Wholesale and Non-Delegated Correspondent	Wholesale and Non-Delegated Correspondent
First Lien: Loan Products / Transaction Type	FHA 203(b) & 203(c) – FHA – 25-30 Year Terms / USDA – 30 Year Term Only Purchase Transactions Only (USDA Forgivable Only)	FHA 203(b) & 203(c) – FHA – 25-30 Year Terms / USDA – 30 Year Term Only Purchase Transactions Only (USDA Forgivable Only)	FHA 203(b) & 203(c) – FHA – 25-30 Year Terms / USDA – 30 Year Term Only Purchase Transactions Only (USDA Forgivable Only)
Borrower Eligibility	Based on FHA or USDA program guidelines (USDA Forgivable Only) No revocable trusts Not required to be first-time homebuyers No income restrictions beyond USDA guidelines	Based on FHA or USDA program guidelines (USDA Forgivable Only) No revocable trusts Not required to be first-time homebuyers No income restrictions beyond USDA guidelines	Based on FHA or USDA program guidelines (USDA Forgivable Only) No revocable trusts Not required to be first-time homebuyers No income restrictions beyond USDA guidelines
Property Locations	All States Except New York	All States Except New York	All States Except New York
Credit Score	Minimum Representative Score of 620. All Borrowers must have at least one score	Minimum Representative Score of 660. All Borrowers must have at least one score	Minimum Representative Score of 660. All Borrowers must have at least one score
Eligible Property Types	1-2 unit properties including Condominiums, PUDs, and Doublewide Manufactured Homes Manufactured Homes Require 640 Forgivable / 660 FICO Repayable (AUS only)	1-2 unit properties including Condominiums, PUDs, and Doublewide Manufactured Homes Manufactured Homes Require 640 Forgivable / 660 FICO Repayable (AUS only)	1-2 unit properties including Condominiums, PUDs, and Doublewide Manufactured Homes Manufactured Homes Require 640 Forgivable / 660 FICO Repayable (AUS only)
Ineligible Property Types	3-4 units. Unique homes including, but not limited to, Log Homes, Barndominium, Singlewide Manufactured Homes, and Geodesic Domes.	3-4 units. Unique homes including, but not limited to, Log Homes, Barndominium, Singlewide Manufactured Homes, and Geodesic Domes.	3-4 units. Unique homes including, but not limited to, Log Homes, Barndominium, Singlewide Manufactured Homes, and Geodesic Domes.
Underwriting	Approval by an Automated Underwriting System (DU, LPA, GUS). Manual underwriting exception allowed subject to FHA / USDA requirements.	Approval by an Automated Underwriting System (DU, LPA). No manual underwriting on Repayable DPA loans (FHA Only, No USDA).	Approval by an Automated Underwriting System (DU, LPA). No manual underwriting on Repayable DPA loans (FHA Only, No USDA).
Income Limits	None	None	None
Debt-to-Income (DTI)	Maximum DTI per AUS. Maximum DTI per agency manual underwriting requirements	Maximum DTI per AUS. No manual underwriting on Repayable DPA Loans	Maximum DTI per AUS. No manual underwriting on Repayable DPA Loans
Blended Score Option	60% of household income must come from the higher credit score Household Income = All Income listed on the application 660 Minimum Score Blend for Forgivable / 670 Minimum Score Blend for Repayable Pricing based on blended credit score Blended Credit Score Formula = Average of the middle Credit Score or lowest score in cases of only 1-2 credit scores AUS Approved Only	60% of household income must come from the higher credit score Household Income = All Income listed on the application 660 Minimum Score Blend for Forgivable / 670 Minimum Score Blend for Repayable Pricing based on blended credit score Blended Credit Score Formula = Average of the middle Credit Score or lowest score in cases of only 1-2 credit scores AUS Approved Only	60% of household income must come from the higher credit score Household Income = All Income listed on the application 660 Minimum Score Blend for Forgivable / 670 Minimum Score Blend for Repayable Pricing based on blended credit score Blended Credit Score Formula = Average of the middle Credit Score or lowest score in cases of only 1-2 credit scores AUS Approved Only
Loan-to-Value	Minimum LTV – 90.00% Maximum LTV/CLTV – Based on FHA/USDA Guidelines	Minimum LTV – 90.00% Maximum LTV/CLTV – Based on FHA/USDA Guidelines	Minimum LTV – 90.00% Maximum LTV/CLTV – Based on FHA/USDA Guidelines
Maximum Mortgage Amount	FHA – Maximum Base Loan Amount up to County Loan Limit USDA – No Maximum	FHA – Maximum Base Loan Amount up to County Loan Limit USDA – No Maximum	FHA – Maximum Base Loan Amount up to County Loan Limit USDA – No Maximum
High Balance	Not available on Forgivable	Available for both 3.5% and 5.0% Repayable DPA and CCA Options. High Balance loans defined per Ginnie Mae (subject to loan level price adjustments (LLPA))	Available for both 3.5% and 5.0% Repayable DPA and CCA Options. High Balance loans defined per Ginnie Mae (subject to loan level price adjustments (LLPA))
First-time Homebuyer	No Overlay	No Overlay	No Overlay
Non-Occupant Co-Borrower	Allowed per FHA and USDA Guidelines	Allowed per FHA and USDA Guidelines	Allowed per FHA and USDA Guidelines
Residency	No overlay per FHA and USDA Requirements	No overlay per FHA and USDA Requirements	No overlay per FHA and USDA Requirements
Mortgage Credit Certificates	Not Allowed	Not Allowed	Not Allowed
Fees	A $500 “SmartBuy Admin Fee” is to be charged on the first mortgage LE/CD in Section A in addition to the standard Click n Close Admin Fee.	A $500 “SmartBuy Admin Fee” is to be charged on the first mortgage LE/CD in Section A in addition to the standard Click n Close Admin Fee.	A $500 “SmartBuy Admin Fee” is to be charged on the first mortgage LE/CD in Section A in addition to the standard Click n Close Admin Fee.
Forgiveness Criteria (FORGIVABLE Product Only)	The second lien is forgiven if there is no 90-day or greater delinquency on the first 60 payments of the underlying first lien and property remains a primary residence. No Re-subordination	Not Applicable	Not Applicable

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