Where to Find Money for Your Down Payment
What down payment assistance actually does
Down payment assistance programs give you money or a loan to cover part or all of the down payment you need to buy a home. The money comes from government agencies, nonprofits, or your lender itself — not from you borrowing more. This matters because it means you are not taking on extra debt; you are using funds designed specifically for this purpose.
The catch is that these programs have real limits. Most cover only 3 to 10 percent of your home's purchase price, and many require you to meet income thresholds, credit score minimums, or first-time homebuyer status. Some programs give you a grant (money you do not repay), while others give you a second mortgage (a loan you do repay, usually with no interest or a very low rate). A few do both — a grant for part of it, a loan for the rest.
The programs that exist depend entirely on where you live. Your state, county, and city may each run their own. Your mortgage lender may offer one. Nonprofits in your area may run one. There is no single national application or website that covers all of them, which is why most people find out about these through their mortgage lender or a housing counselor.
Key Takeaways
- Down payment assistance comes as a grant (assistance programs), a loan, or both, and which type you find depends on your location and income level.
- Most programs require you to be a first-time homebuyer, have a credit score of at least 580 to 640, and earn below a certain income limit that varies by program and location.
- Your mortgage lender often knows about programs you may have access to for and may offer their own, so asking them should be your first step.
- State and local housing finance agencies run programs specific to your area, and you can find yours by searching "[your state] down payment assistance" or calling 211.
- A HUD-approved housing counselor can review all available programs for you at no cost and help you understand which ones match your situation.
How to find programs in your state and county
Start by calling your state's housing finance agency. Every state has one, though the name varies — it might be called the State Housing Finance Agency, the Housing Development Authority, or the Home Finance Agency. A quick search for "[your state name] housing finance agency" will give you the phone number and website. They maintain lists of down payment assistance programs run by the state, and staff can tell you which ones you might may have access to for based on your income and location.
Next, contact your county or city housing authority or community development office. Many counties and cities run their own programs or partner with nonprofits to run them. A search for "[your county] down payment assistance" or "[your city] down payment assistance" will usually surface these. If the search does not work, call your county assessor's office or city hall and ask for the housing or community development department.
You can also call 211 (a free referral line) and ask for down payment assistance programs in your area. The counselor will know what is currently open and taking new people, which matters because many programs run out of funding partway through the year and reopen later.
What your mortgage lender can offer you
Before you search on your own, tell your mortgage lender that you need down payment assistance. Many lenders offer their own programs, and some will match or contribute to assistance you find elsewhere. Lenders know the programs in your state because they work with them regularly, and they can often tell you in one conversation whether you may have access to and how long approval takes.
Some lenders offer down payment assistance as part of their loan product — for example, a loan that covers 97 percent of the home price, with the lender covering the remaining 3 percent as a grant or a second mortgage. Others partner with nonprofits or state programs and can submit your information directly. A few will even reduce your interest rate if you use certain down payment assistance programs, which saves you money over the life of the loan.
Ask your lender specifically: "Do you offer down payment assistance, or do you know of programs I may have access to for?" and "Can you submit my information to any of those programs?" This can cut weeks off the process because the lender already has your financial documents and credit report.
Income limits, credit scores, and other requirements
Most down payment assistance programs require you to be a first-time homebuyer, though "first-time" usually means you have not owned a home in the past three years — not that you have never owned one. Some programs waive this for teachers, nurses, or other professions facing housing shortages in their area.
Income limits vary widely. Some programs serve households earning up to 80 percent of your area's median income; others go up to 120 percent. A few have no income limit at all. Your lender or housing counselor can tell you the limit for each program you are looking at, and you can find your area's median income by searching "HUD area median income [your county]."
Credit score minimums usually fall between 580 and 640, though some programs have no minimum or will work with you if you have no credit history. If your score is below the minimum, some programs will still consider you if you complete a homebuyer education course, which many nonprofits offer for free or low cost.
You will need to show that you can afford the monthly mortgage payment even with assistance. Lenders typically want your total monthly debt (including the new mortgage) to be no more than 43 to 50 percent of your gross monthly income, depending on the program.
Grants versus loans: what you actually owe back
A grant is money you do not repay. It reduces the amount you need to borrow, which lowers your monthly payment and the total interest you pay over time. Some grants come with strings — for example, you may have to live in the home for five years, or you may have to work in a certain profession or live in a certain neighborhood. If you break the condition, you may have to repay part or all of the grant.
A second mortgage or soft second is a loan you do repay, but usually with terms much better than a regular loan. Interest rates are often 0 percent, meaning you pay back exactly what you borrowed with no extra cost. The loan may not require a monthly payment — instead, it comes due when you sell the home or pay off your first mortgage. This means your monthly payment stays lower than it would if you had taken out a bigger first mortgage.
Some programs combine both: a grant for part of your down payment and a soft second for the rest. This gives you the benefit of assistance programs plus a low-cost loan that does not hit your monthly budget hard.
How to work with a housing counselor
A HUD-approved housing counselor can review all the programs you may have access to for and explain the differences between them. This service is free, and counselors work for nonprofits, not for lenders or the government. You can find one by searching "HUD housing counselor [your city]" or by calling 211 and asking for a counselor in your area.
Bring your pay stubs, tax returns, and a list of your debts to the counseling session. The counselor will walk through your finances, explain how down payment assistance affects your loan, and help you understand what you will owe back. They can also tell you if you should wait for a different program to open, or if you should move forward with what is available now.
Many counselors also offer homebuyer education courses, which some programs require before you can receive assistance. These courses cover how mortgages work, what to expect at closing, and how to avoid common mistakes. Taking one can also improve your credit score slightly and show lenders that you are serious about buying responsibly.
Timeline and next steps after you find a program
Once you have found a program you want to use, you will need to submit an application along with documents: recent pay stubs, tax returns from the past two years, bank statements, and proof of the home you are buying (usually the purchase agreement). The program will verify your income, check your credit, and confirm that the home meets their standards (for example, it is not in a flood zone or does not need major repairs).
Approval typically takes two to six weeks, though it can be faster if you work with your lender and the program is not backed up. Some programs approve you before you find a home; others require you to have a purchase agreement in place first. Ask the program which comes first so you know what order to do things in.
Once you are approved, the program will send the money to your lender or directly to the title company at closing. You will not see the money yourself — it goes straight to reducing what you owe. At closing, you will sign documents acknowledging the grant or second mortgage, and then you will own the home.
Frequently Asked Questions
Can I use down payment assistance if I have bad credit?
Many programs work with credit scores as low as 580, and some have no minimum. If your score is below a program's minimum, completing a homebuyer education course often waives the requirement. Ask your lender or housing counselor which programs accept lower scores.
What if I do not may have access to for any programs in my area?
Ask your lender about their own programs or about lenders who specialize in low-down-payment mortgages. Some lenders will finance 95 or 97 percent of the home price, which means you only need 3 to 5 percent down. This is not assistance, but it achieves the same goal.
Do I have to repay a grant if I sell the home?
It depends on the program. Some grants have no repayment requirement. Others require you to repay part or all of it if you sell within a certain number of years (often five to ten). Read the program's terms carefully, and ask your counselor to explain the repayment condition before you accept the grant.
Can I use down payment assistance if I am not a first-time homebuyer?
Most programs require first-time homebuyer status, but some exceptions exist. Teachers, nurses, and other professions in high-need areas may may have access to even if they have owned before. Ask your lender or housing counselor whether any programs in your area waive this requirement for your profession.
What happens if I do not get approved?
Ask the program why you were denied — it may be income, credit, or the home itself. If it is credit, you can work on raising your score and reapply later. If it is income, you may may have access to for a different program with a higher limit. If it is the home, you can look at a different property. A housing counselor can help you understand what to fix and which programs to try next.