Down Payment Grant

A down payment grant is a form of financial assistance to help buyers get the funds required for paying a down payment on a home.

What is a down payment

Most mortgages require, or at least highly recommend, a minimum 20% downpayment on a home. Depending on where you live, this can be challenging to save for and put off buying a home for years. A down payment grant is one form of a down payment assistance program that helps give you the funds for your down payment. Furthermore, there is usually no repayment required.

How do down payment grants work?

Most down payment assistance programs or DPA programs are operated by state housing finance agencies or local housing authorities. They provide a set amount of money to qualified borrowers. This money can be used for their down payment or closing costs.

In most cases, this money does not need to be paid back. However, there are usually conditions in place. If you do not abide by these provisions, you will be required to pay the money back.

For example, one common requirement is that the property must be used as your primary residence for 5 to 15 years, which varies on the amount of your grant. If you decide to move or sell the home before that time is up, you will be required to pay back the grant amount.

How do down payment grants work?

The money allocated to the states originates from the Department of Housing and Urban Development or HUD. HUD’s website lists the different down payment assistance programs offered in your state.

How to qualify for a down payment grant?

Each state’s grant programs have specific criteria and conditions that homebuyers must follow. In general, aside from sufficient income and a good credit score, there are additional general qualifications that determine borrower eligibility.

First-Time Buyer

Most programs are designed for a first-time buyer seeking to purchase his or her primary residence. HUD has a broad definition for “first-time buyers.” The common definition is, “an individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property.” However, HUD also includes “a single parent who has only owned with a former spouse while married.” Check HUD’s definition to see if you qualify as a first-time buyer.

Income Limits

While a down payment grant is not exclusively for low-income households, income limits typically apply. For example, one requirement may be that the borrower’s income cannot exceed 80% of the area median income.

Maximum Purchase Price

To qualify for assistance, the property must be within the maximum purchase price. The range varies by local housing costs.

Homebuyer Counseling Program

A down payment grant is to help new homebuyers be successful with their mortgage. As a result, you may need to attend courses to learn about managing your new financial responsibilities.


The state’s grant program likely has geographic boundaries that determine a property’s eligibility for the program. Your property must be within the designated area to qualify.

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