Down Payment Help: What Exists and How to Ask for It

The kinds of help

• Grants. Money that is not repaid, usually with conditions.
• Forgivable second loans. Forgiven after you live in the home for a set number of years.
• Deferred second loans. No monthly payment. The balance comes due when you sell, refinance or pay off the first mortgage.
• Shared appreciation loans. Repaid along with a share of the home’s increase in value.
• Gift funds. Money from family, documented with a gift letter.
• Seller and lender credits. Credits toward closing costs, negotiated in the offer or built into the loan.
• Low and no down payment loans. VA, USDA, FHA and some conventional options need little or nothing down to begin with.

Every state has a housing finance agency, and most offer first-time buyer loans or help with the down payment and closing costs. Many cities, counties and employers run their own programs as well.

Who it tends to fit

Buyers with steady income and a solid payment history whose savings are the thing holding them back. Most programs are for a home you will live in. Many are for first-time buyers, often defined as someone who has not owned a home in the past three years, and most set limits on household income and purchase price.

If your savings already cover the purchase comfortably, help with strings attached may not be worth it. Compare one option with help and one without.

What to gather

• The county or city where you plan to buy
• Your household size and the total income of everyone who will live in the home
• Your last 30 days of pay stubs, two years of W-2s or tax returns, and two months of bank statements
• Whether you have owned a home in the past three years
• If family is gifting money: who, and roughly how much

Some programs ask for a homebuyer education class. It is usually online and can be finished early.

Common snags

• Funding comes and goes. Programs open, fill and close. A program that exists is not always a program with money available today.
• The strings. A deferred balance can come due when you sell or refinance. Read the repayment terms before you build an offer around the help.
• The paired first mortgage. Assistance is often tied to a specific first loan. Compare the whole package, not just the help.
• Lender participation. Not every lender works with every program. Ask before you plan around one.

For program names and current California details, see down payment assistance by state.

Your next step

Tell us where you are buying and who is in your household. We check which programs are open and whether the numbers work better with help or without it.

When you want to talk it through, book a short phone call with Zak on Chris Lamm’s team at MortgageOne. No credit check is needed for a first call, and you can bring as many questions as you like.