The best-kept secret for buying your first home

Coming up with a home down payment is often the biggest obstacle buyers face when purchasing a home. It can take years to save, putting potential buyers’ homeownership aspirations farther out of reach.

Down payment assistance (DPA) programs can help fill the void, but many buyers don’t know these programs exist or how to use them.

According to Down Payment Resource’s (DPR) Homeownership Program Index, there were 2,619 homebuyer assistance programs in the U.S. in the fourth quarter of 2025, up 6% over a year ago, with an average benefit of $18,000 per borrower. 

As of December, the national median existing-home sales price was $405,400, according to the National Association of Realtors (NAR). Meanwhile, the average 30-year fixed mortgage rate remains above 6%, leaving many buyers struggling to come up with ample cash for a down payment and closing costs. 

Depending on the home loan you choose, you might have to come up with 3% to 5% of a home’s purchase price for a down payment, and an additional 2% to 6% of the loan amount in closing costs.

“Affordability will remain the defining challenge for homebuyers in 2026, and down payment programs are one of the most practical tools lenders have to address it,” said DPR Founder and CEO Rob Chrane. “When DPA lowers loan-to-value ratios and helps cover upfront costs, it doesn’t just improve borrower eligibility; it improves loan quality.”

Recognizing the bind many homebuyers are in, DPA programs are growing — and offering more flexibility in their guidelines. This includes higher income limits, expanded programs for repeat and military buyers and more options for manufactured homes and multifamily properties. 

How down payment assistance programs work

Down payment assistance programs help buyers cover upfront costs, including the down payment and (in some cases) closing costs. The assistance typically falls into two categories: forgivable grants or repayable second mortgages.

Forgivable grants don’t require repayment if you meet certain conditions, such as living in the home for a certain period of time as your primary residence. While some programs take an all-or-nothing approach, one of Pennsylvania’s DPA programs offers a 10-year declining forgiveness schedule, with 10% of the assistance amount forgiven each year over a decade.
Repayable assistance, on the other hand, usually involves a second mortgage, which comes in second lienholder status behind your primary mortgage. You have to repay the money, but it covers your upfront costs 100%, leaving only closing costs to worry about. DPR found that a majority (56%) are second-mortgage programs.

In many cases, closing costs can be covered through seller credits, said Edwin Santiago, producing branch manager with CrossCountry Mortgage in Wayne, Pennsylvania.

"No organization wants to give you, say, 5% of the purchase price as a grant, and then you go sell the property in six months," Santiago said. "They want to help you buy a home that you're planning on living in and staying in."

DPA qualification requirements

Each DPA program has its own specific program rules and borrowing guidelines, but here are some common requirements:

• Income limits: Many programs cap household income, often at $60,000 to $80,000. These limits haven’t kept pace with rising housing costs in many areas.
• Credit score: DPA programs may have minimum credit score requirements to sign with the loan program you’re applying for. For instance, Neighborhood Housing Services of San Antonio Down Payment Assistance Program in Texas requires a minimum credit score of 580 for first-time buyers.
• First-time buyer status: About 63% of DPA programs require that you haven’t owned a home you’ve lived in for the past three years, according to DPR’s data. Some exceptions exist for investment properties or manufactured homes.
• Property type restrictions: Most programs accept single-family homes and duplexes but exclude three- and four-unit properties. About 1,000 programs nationwide offer assistance for manufactured homes, DPR found.
• Loan type: Not all DPA programs work with every loan type. Check with your local housing authority to verify whether the DPA program is compatible with your chosen financing (i.e. FHA, VA, USDA or conventional) before applying.
• Interest rate: Repayable programs and some forgivable grants may carry slightly higher interest rates. This can impact your monthly payment and overall debt-to-income ratio.

If you're trying to figure out what you can actually afford, talk through the pros and cons of your situation with your real estate agent and loan officer, said Kara Ng, senior economist with Zillow Home Loans.

Where to find down payment assistance (and why more buyers don’t use it)

Down payment assistance programs are operated by state, county and local public housing agencies, as well as nonprofits. Your loan officer should know which programs apply to your situation in your area, otherwise, it’s hard to know where to turn for help.
"There is no good central repository because it's nearly impossible to keep up with every single one in the lending space," Santiago said, adding that many of the programs are run by nonprofits that lack large marketing budgets. 

This information gap hurts first-time buyers, especially first-generation homebuyers who can’t rely on a financial gift or mortgage guidance from a parent or relative.

"If you're the first in your family to buy a home, then that means you can't tap into the bank of mom and dad for down payment help," Ng said.

To help borrowers find DPA information, Zillow now includes links to applicable DPA programs directly on property listings on its home search portal.

The math that makes down payment assistance worth it

With home prices and mortgage rates up significantly in recent years, homebuyers (especially first-timers) are facing a housing affordability crisis like no other. 

According to Zillow’s latest research, the typical U.S. household spends 32.6% of its median income on a typical mortgage — even after a 20% down payment. That’s slightly more than the 30% share for housing costs that Zillow recommends, Ng noted.

"That means the typical household in the U.S. cannot afford the typical home in the U.S. right now," Ng said. A 20% down payment alone is over $71,800 for a typical house in the U.S. ($359,078) — a daunting amount that takes most households over a decade to save.
Most first-time homebuyers typically don’t put anywhere near 20% down. In fact, the median first-time buyer down payment was 10% in 2025, according to NAR.

That’s where DPA programs can help bridge the gap. 

According to Down Payment Resource, the average program provides around $18,000 in benefits, reducing buyers' loan-to-value ratios by 8.8 percentage points and strengthening their overall qualification profile. On the flip side, it means they may not qualify for as much house, as DPA programs tend to drive interest rates higher.

"Any little bit helps," Ng said. "If you're on the cusp of being able to afford [...] and if you don’t have the bank of mom and dad, down payment assistance is definitely a resource you should be looking into."