Down Payment Assistance (DPA) Programs are designed to help homebuyers reduce the upfront costs of purchasing a home, including the down payment and sometimes closing costs. These programs are commonly offered by state and local housing agencies, municipalities, and non-profit organizations.

DPA can be structured in several ways depending on the program. Some options require no repayment, while others are provided as a second mortgage that includes monthly payments.

How It Works

1. Eligibility Requirements

Eligibility varies by program and may be based on:

• Income limits
• Credit score minimums
• Property location
• First-time homebuyer status (some programs allow repeat buyers)

2. Types of Down Payment Assistance

DPA programs may be structured as:

• Grants
  Funds that do not require repayment, provided the borrower meets program requirements.
• Forgivable Loans
  A second lien that is forgiven after a set period of time, as long as the borrower remains in the home and complies with program terms.
• Repayable Second Mortgages
  A second lien with monthly payments, typically offered at a low or fixed interest rate, that runs alongside the primary mortgage.

3. Loan Pairing

DPA is usually combined with FHA, VA, USDA, or conventional financing. Any repayable assistance is included in the borrower’s debt-to-income ratio and reviewed during underwriting.

4. Important Considerations

Before using a DPA program, buyers should understand:

• Whether the assistance is repayable or non-repayable
• Any monthly payment associated with a second lien
• Program rules related to refinancing, selling, or renting the home