Down Payment Assistance Loans

How down payment assistance (DPA) works

It’s worth noting that the agencies, charities and local governments that sponsor these programs fund them annually. That means they can be flush with cash at the start of each financial year but run out before the end. The federal government fiscal year runs from October 1 until September 30. So you have a better shot at that money in the fall than you do late summer.

But program fiscal years are not all the same, and not all budget annually. With thousands of down payment assistance programs nationwide, operating in virtually every community, you may have several choices. Nearly all programs are local and independent of each other. Many are run by state, city or local governments and others by not-for-profit organizations and charities.

Finding DPA programs

The sheer number or organizations and programs means there’s no standard set of rules for how down payment assistance works. That makes them harder to find and understand. You may qualify under one program but not another. And you might get an outright grant (effectively a gift) from one but a low- or zero-interest loan from another.

This guide shows you what’s available in your area as of this writing.

Approved lenders

When you accept down payment assistance, you’ll borrow from a lender that participates in the program. And those approved lenders generally offer a wide range of mortgages, including ones backed by the government (VA, USDA or FHA loans) or that comply with Fannie Mae and Freddie Mac’s rules.

So once you know what program you want, you may be able to shop among several lenders approved to fund a loan through your program.

Closing costs

Some assistance programs explicitly allow you to use the funds they provide for closing costs. Others may not.

Some programs require a minimum contribution from you when you use them to buy a home. That’s because the lender and agency has less risk when the buyer has some of his or her own money tied up in the purchase.