Down Payment Assistance (DPA) refers to programs—offered by state agencies, local governments, nonprofits, and sometimes lenders—that help homebuyers cover all or part of their down payment (and sometimes closing costs).
These programs are often designed for first-time buyers, low- to moderate-income households, or those purchasing in targeted areas.
Key characteristics:
- Types of assistance:
- Grants – Free money you don’t have to repay.
- Forgivable loans – Loans that are forgiven if you meet certain requirements (like staying in the home for a set time).
- Deferred-payment loans – Loans with no payments until you sell, refinance, or pay off the mortgage.
- Low-interest loans – Secondary loans with favorable terms to cover your down payment.
- Eligibility factors: Income limits, purchase price limits, credit requirements, and location restrictions often apply.
- Why it’s beneficial:
- Reduces upfront costs – Makes buying a home possible without years of saving.
- Expands buying power – You may be able to afford a better home or location.
- Bridges the affordability gap – Particularly helpful in high-cost markets.
- Can pair with FHA, VA, or conventional loans – Works alongside standard loan products.
- Encourages community growth – Many programs are designed to boost homeownership in targeted neighborhoods.