Down payment assistance programs work by helping first-time home buyers purchase homes with little or none of their own money or down payment.
Down payment assistance programs are administered on the federal, state, and local levels. Federal DPA programs include first-time home buyer tax credits, cash grants to buy homes, and interest rate subsidies for higher home affordability.
Most DPA programs, though, are administered by state and local governments, and by private entities and charitable organizations. Non-federal programs may require buyers to use specific mortgage loan types such as FHA loans; and, may require additional paperwork not associated with the mortgage application.
Down payment assistance is sometimes paid as cash at closing or before. Other times, they’re awarded as forgivable loans and paid at the time of closing. Some DPA programs target professionals, such as teachers, nurses, and EMTs. Others are available to any person buying in a certain neighborhood or street.