Down Payment Assistance Programs

Down Payment Assistance Programs are structured to help clients that have good credit but lack assets for a down payment. Down payment assistance programs are typically meant for first-time home buyers.

However, a repeat home buyer often counts as a “first-time buyer” if they haven’t owned a home in the past three years. Other requirements might include income caps, purchase price caps, and buying a home in a qualified area. Many programs also require homebuyer education courses.

Every down payment assistance program is a little different. The exact criteria to qualify will depend on where you live and what programs are available. That said, many of them have similar guidelines.

The lender does a 2nd loan (2nd lien) to most, if not all, of the down payment and closing costs. When the loan closes, you will have your primary (1st lien) mortgage and a secondary (2nd lien) down payment assistance loan.

Down payment assistance (DPA) programs help home buyers with loans or grants that reduce the amount they need to save for a down payment. Provided you qualify, you could receive an outright grant or a low- or no-interest loan to cover your down payment. Some DPA funds can be used for closing costs, too.

Most DPA programs are offered at the local level and eligibility requirements vary from one program to the next.

• First-time home buyers
• Up to 50% DTI (Debt-to-Income Ratio)
• Minimum 640 FICO^® Score
• The Home must be a Primary Residence
• Buyers must have low- to moderate-income
• The home is within local purchase price limits
• The DPA is used in conjunction with an approved mortgage program
• You work with an approved mortgage lender