WASHINGTON, DC — The biggest barrier to buying a home for many households is the down payment, and that hurdle can look especially steep in today’s market. The National Association of Realtors said the median down payment in 2025 was 19% of the purchase price, which works out to about $76,608 on a median-priced home near $403,000.
Down payment assistance programs, often called DPAs, are one way buyers may be able to reduce the cash they need at closing. These programs can come as grants or loans that cover part of a buyer’s down payment, and some also help with closing costs. When combined with a low-down-payment mortgage, they can move homeownership within reach sooner than savings alone would allow.
How grants and loans can shrink the cash needed at closing
DPAs are designed to offset upfront homebuying costs, but the amount a buyer gets depends on the program and the home price. Ashley Harris, director of homebuyer education at Neighbors Bank, said assistance can range from $2,000 to $30,000 or more.
Some programs only help with the down payment, while others can cover both the down payment and closing costs. Harris said the most generous programs can leave a buyer with very little out-of-pocket expense at closing, though each program also has a maximum purchase price limit and other eligibility rules.
How the money is structured matters just as much as the amount. A program may be offered as a grant, a forgivable loan, a deferred loan or a traditional loan with monthly payments.
The four main ways assistance is repaid
Grants are the simplest form of help because they do not need to be repaid. They are often funded by state housing agencies, nonprofits and local governments, and they usually come with stricter qualification standards than some other options.
Forgivable loans are borrowed funds that are erased after the buyer stays in the home for a set period. If the owner sells too early or fails another requirement, repayment can be triggered. Deferred loans do not require monthly payments, but the balance comes due when the home is sold or the mortgage is refinanced.
Some assistance is offered as a standard loan, often functioning like a second mortgage with regular principal and interest payments. In every case, the money is applied during closing to reduce what the buyer must bring to the table.
Where buyers can look for help beyond their lender
Down payment assistance comes from a wide range of places, including nonprofit groups, state housing departments, municipalities, community development organizations and some private employers. Certain lenders also run their own assistance programs.
Harris said a lender who understands DPAs can identify programs in the buyer’s area and help manage the application process. If the lender is unfamiliar with these products, the buyer may have to find the programs independently and coordinate the details on their own.
Third-party tools can help with the search. NeighborWorks offers a DPA finder, and DownPaymentResource.com lists more than 2,000 assistance options. Those directories can be useful starting points for buyers trying to match local programs with their own finances and location.
Who qualifies and why many buyers never apply
Eligibility standards vary widely, but many programs are aimed at low- to moderate-income buyers and use area median income as the benchmark. Some programs set no income cap at all, while others also require homebuyer education, first-time buyer status or a job in a targeted profession such as teaching, health care or public safety.
Location can matter too. Some programs are tied to neighborhoods or cities that are trying to attract new residents or spur development. Harris said a good lender should not treat down payment assistance as something unusual, but instead should help buyers figure out which programs fit their circumstances.
Even with broad awareness, many people do not investigate their options. A Neighbors Bank study found that 90% of middle-income renter respondents knew down payment assistance existed, but 46% had never researched what was available in their area.
How DPA stacks with FHA, USDA and conventional loans
Most assistance programs are meant to be paired with a mortgage that already requires a relatively small down payment. FHA loans can require as little as 3.5% down, while conventional loans may require 3% down. On today’s median-priced home, that is a little more than $14,000 for FHA and about $12,100 for conventional financing.
USDA loans generally do not require a down payment and may offer up to 100% financing. In that case, assistance money may instead go toward closing costs, prepaid expenses or reducing the amount financed, depending on USDA rules and the terms of the assistance program.
Harris said some buyers can stack multiple forms of aid, such as a nonprofit grant with employer assistance or a state program with a local one.
Why seller credits can complicate the math
Combining assistance can become tricky when a seller also offers concessions. Redfin said nearly half of sellers gave concessions in May 2026, which is common in today’s market, but those credits may compete with DPA funds for the same eligible costs.
If the closing costs and prepaid expenses are not large enough, some assistance or seller credit may go unused. Increasing the down payment does not always solve that problem, because some DPA programs require the first mortgage to stay within certain loan-to-value limits.
Harris compared the process to a system with strict rules, not a coupon stack that erases every charge. The key is making sure each dollar has an eligible cost to cover and that the mortgage structure still fits the program requirements.
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