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For most first-time buyers, the biggest barrier to homeownership is not qualifying for a mortgage. It is the down payment and closing costs. A $350,000 home with 10% down means $35,000 up front plus another $7,000 to $17,500 in closing costs. The good news: down payment assistance programs exist in every state, and they are dramatically underused. Here is what is available in 2026 and how to find programs near you.
Key Takeaways
- Down payment assistance exists in every state, often $5,000 to $25,000, and is widely underused.
- Federal loans lower the bar: FHA needs 3.5% down, and HomeReady or Home Possible can need just 3%.
- “First-time buyer” usually means you have not owned a home in three years, so more people qualify than expect to.
- Start with the free tools: a HUD counselor and downpaymentresource.com surface programs a basic lender search misses.
What Down Payment Assistance Actually Is
Down payment assistance (DPA) programs help cover part or all of your down payment, and sometimes closing costs. They come in a few forms:
- Grants: Free money you do not repay. Less common, but very valuable when available.
- Forgivable loans: Forgiven if you stay in the home for a set period (often 5 to 10 years). Sell or refinance early and you repay it. Essentially free money if you stay long enough.
- Deferred payment loans: No monthly payments. You repay when you sell, refinance, or pay off the first mortgage.
- Low-interest second mortgages: A below-market second loan for the down payment, which you pay alongside your first mortgage.
Federal Programs Available Nationwide
FHA Loans: 3.5% Down
FHA loans allow 3.5% down with a credit score of 580 or higher. On a $350,000 home, that is $12,250 instead of $70,000 for 20% down. The trade-off is mortgage insurance: a 1.75% upfront premium (usually rolled into the loan) plus about 0.55% a year. As of April 2026, FHA also accepts the VantageScore 4.0 and FICO 10T credit models, which use trended and alternative data (such as rent and utility history) and can help buyers with thin traditional credit files.
Fannie Mae HomeReady and Freddie Mac Home Possible: 3% Down
These conventional loans need only 3% down for buyers at or below 80% of area median income, with lower PMI than FHA for higher credit scores. Income limits vary by location, so check eligibility at fanniemae.com/homeready or with a lender.
HUD-Approved Housing Counseling: Free
HUD-approved counselors provide free homebuyer education and connect you with local DPA programs you might never find on your own. Find one at hud.gov/counseling or call 1-800-569-4287. This is one of the most underused resources in homebuying.
State Programs: Where the Biggest Money Is
State housing finance agencies (HFAs) run the largest and most valuable DPA programs, and every state has one. Programs vary widely but commonly offer $5,000 to $25,000 in assistance. The table below is a representative snapshot as of 2026, not a complete list, and details change every year, so verify with your state HFA.
| State | Program | Assistance (as of 2026) |
|---|---|---|
| California | CalHFA MyHome Assistance | Up to 3.5% of purchase price |
| Texas | TDHCA My First Texas Home | Up to 5% of the loan amount |
| Florida | Florida Homeownership Loan Program | Up to $35,000 |
| New York | SONYMA programs | Up to $15,000 forgivable |
| Illinois | IHDA Access programs | Up to $10,000 |
| Georgia | Georgia Dream | Up to $10,000 |
| Washington | WSHFC programs | Up to $10,000 |
To find your state’s current programs, search “[your state] housing finance agency” and look for the first-time homebuyer section.
Income and Purchase Price Limits
Most DPA programs have income limits (often 80% to 120% of area median income) and purchase price caps (often the conforming loan limit or a set dollar amount). These vary by county to reflect local costs, so a program that looks out of reach in an expensive metro may actually have higher limits there than in a rural county. Do not rule yourself out before checking.
The “First-Time Homebuyer” Definition Is Broader Than You Think
Most programs define a first-time homebuyer as someone who has not owned a primary residence in the past three years. So if you owned a home before but have rented for three or more years, you likely qualify again. This catches a lot of people off guard who assume they are ineligible.
How to Find Programs in Your Area
- Use the Down Payment Resource tool at downpaymentresource.com. Enter your location, income, and price range to see programs you may qualify for.
- Contact your state housing finance agency directly.
- Ask your lender about DPA programs, since some lenders are approved to offer specific state programs.
- Talk to a HUD-approved housing counselor who knows your local market.
Once you know your target, our guide on how to save for a down payment fast helps you build the rest, and the 50/30/20 budget rule shows where it fits. Park your savings in a high-yield savings account so it earns while you wait.
FAQ
Do I have to repay down payment assistance?
It depends on the type. Grants are not repaid, forgivable loans are forgiven if you stay long enough, and deferred or second-mortgage loans are repaid later or monthly. Check each program’s terms.
Who counts as a first-time homebuyer?
Usually anyone who has not owned a primary residence in the past three years, so prior owners who have been renting often qualify again.
How much assistance can I get?
It varies widely by program, but many offer $5,000 to $25,000. Some states offer more. Verify the current amount with your state HFA.
What credit score do I need for an FHA loan?
Generally 580 or higher for 3.5% down. As of April 2026, FHA also accepts VantageScore 4.0 and FICO 10T, which can help buyers with limited traditional credit.
Where do I start?
Check downpaymentresource.com and talk to a free HUD-approved housing counselor. Both surface programs a standard lender search often misses.
Bottom Line
Down payment assistance exists in every state and is widely underused, so do not assume you have to save the entire down payment yourself. Combine a low-down-payment loan with state or local DPA, confirm your eligibility (the three-year rule helps many people), and start with free tools like downpaymentresource.com and a HUD counselor. Program details change yearly, so verify current terms before applying.
This article is for educational and informational purposes only and is not financial or lending advice. Program details, amounts, and eligibility change frequently and vary by state and county. Confirm current terms with the program, your lender, or a HUD-approved counselor before applying.
