By Corey Tressler | NMLS #1767005 | Last updated August 20 2026
Down payment assistance programs cover some or all of the cash you’d otherwise need at closing. That means you can buy a home with very little, or even nothing, out of pocket. Here’s what to know before you count on one.
- They come in five main structures: grants, forgivable second mortgages, deferred (silent) second mortgages, repayable second mortgages, and shared-equity deals.
- Grants never get repaid, but most come with a forgiveness period. Some run just six payments; others run three to five years.
- Silent second mortgages carry a 0% rate and no monthly payment, but they come due when you sell, move out, or refinance.
- Requirements vary by program. Some require you to be a first-time buyer, some have income caps, and some only pair with FHA or conventional loans.
- Pride Lending has access to more than a dozen down payment assistance programs to match against a buyer’s specific situation.
- The advertised dollar amount rarely tells the whole story. Forgiveness terms and loan-type restrictions matter more than the headline number.
What down payment assistance programs actually do
I’ve been writing loans since 2012. Down payment assistance is one of my favorite topics, because of how much it actually moves the needle for buyers. Costs are high right now, and most people simply don’t have a lot of cash sitting around. Down payment assistance programs let you buy a home while bringing very little, or nothing, to the closing table.
In a nutshell, a down payment assistance program covers some or all of your required down payment. Some programs go further and cover part or all of your closing costs too. There are literally hundreds, if not thousands, of these programs across the country, and they’re all structured a little differently. I’ll walk through the handful of structures that show up most often.
What buying without help actually costs
Here’s why this matters. The minimum down payment on a conventional loan is 3% of the sales price. On a $500,000 home, that’s a $15,000 down payment. Add in closing costs and you’re looking at roughly $23,000 to $25,000 all-in, out of pocket. That covers just the closing table on a standard conventional loan.
For most people, that’s not a small number. According to the Consumer Financial Protection Bureau, a down payment of at least 3% is typical for a conventional mortgage. Many lenders and loan types ask for more. Down payment assistance exists specifically to close that gap.
The main types of down payment assistance programs
Most down payment assistance falls into one of five buckets: grants, forgivable second mortgages, deferred (silent) second mortgages, repayable second mortgages, and shared-equity deals. Each one handles repayment differently, and that difference matters more than the dollar amount attached to it.
Grants
A grant is basically a gift: money given to you at closing that you never pay back. Most grants are forgiven after a set period. I’ve seen three-year and five-year forgiveness periods, but my favorite, and the one I use most, is forgiven after just six payments. Once you’ve made six payments on the loan, it’s completely forgiven, no strings attached.
I like the six-payment option better than the longer ones for a simple reason. A three- or five-year forgiveness period locks you into that loan for longer. If rates drop and it makes sense to refinance, you want that option available to you. With a longer forgivable grant, refinancing early can mean paying back the assistance you were given. That defeats the point of taking a grant in the first place.
Forgivable second mortgages
Instead of forgiving the assistance outright, some programs structure it as a second mortgage that forgives gradually. A common setup: 20% of the balance forgiven each year over five years. If you sell or refinance partway through, whatever hasn’t been forgiven yet comes due.
Deferred (silent) second mortgages
A “silent second” is assistance structured as a second mortgage with a 0% interest rate and no monthly payment. It becomes due when you sell the home, move out and turn it into a rental, or transfer ownership.
A silent second has one clear upside: the rate on your primary loan usually stays close to standard market rates. That’s because the lender isn’t pricing in the interest-free assistance the way it would elsewhere. There’s a downside too. You’ll repay the assistance eventually, usually out of your sale proceeds, and that eats into the equity you’ve built. Say you sell five years after buying. Part of what you’d otherwise pocket goes toward paying off that second mortgage first.
Even so, a silent second is often a great option for buyers who care most about keeping their total monthly payment low. A friendlier rate on the primary loan can outweigh the eventual repayment for the right buyer.
Repayable second mortgages
This type does exactly what it sounds like. Instead of the 0% rate and no monthly payment of a silent second, a repayable second mortgage amortizes. You pay it down a little each month, just like your first mortgage.
Shared-equity assistance
Less common, but worth knowing about: shared-equity, or shared-appreciation, assistance. Say a program gives you $25,000 toward your down payment. Instead of structuring that as a grant or second mortgage, the provider gets its contribution back. They also get a portion of your home’s appreciation when you sell.
I’d tell anyone considering this option to think it through carefully. What looks like cheap money today could end up costing you a lot down the road if your home appreciates significantly.
Why the advertised number isn’t the whole story
With down payment assistance programs, the details matter more than the headline number. You’ll see ads that say something like “receive up to $50,000 in down payment assistance,” and it sounds incredible. But when you actually look up the program’s guidelines, that $50,000 might come with a five-year forgiveness period or a shared-equity split. Or it might only apply to FHA loans when a conventional loan would actually make more sense for your situation.
Be cautious of a lender who advertises a program that way. If they won’t walk you through the specific terms, I’d question whether they can guide you through the rest of the process. The number on the billboard isn’t the number that ends up mattering.
Who actually qualifies for down payment assistance
Every program comes with its own guidelines, and they vary more than most buyers expect.
- First-time buyer status: Some programs require it, others don’t. Check the first-time homebuyer requirements for any specific program before assuming you qualify, or don’t.
- Income limits: Some programs cap household income. Others waive that cap for certain groups, including teachers, first responders, volunteers, and medical workers, just to name a few.
- Loan type: Some programs pair with conventional loans, others with FHA loans. A program that looks great on paper might not pair with the loan type that’s actually best for you.
- Who runs the program: State or local housing finance agencies, cities, counties, and nonprofits administer most down payment assistance, rather than one national source. According to Freddie Mac, assistance can come as grants, low or zero-interest second mortgages, or tax credits. Guidelines differ by administrator.
Because the guidelines differ so much program to program, what’s right for one buyer isn’t automatically right for the next.
Is down payment assistance always the right move?
Not always. Taking on a second mortgage or shared-equity arrangement just to preserve cash usually isn’t worth it if you already have a healthy down payment saved. A longer forgivable grant or second mortgage can also backfire if you’re not confident you’ll stay put through the forgiveness period. Moving or refinancing early can trigger repayment. Down payment assistance programs are a tool for a specific situation: not enough cash for closing, but otherwise ready to buy. They’re not a reason to take assistance you don’t need.
How Pride Lending fits in
At Pride Lending, we’re brokers. That means we have access to more than a dozen down payment assistance programs. A single retail bank might only offer one or two. Broker access lets us compare programs against each other instead of fitting you into whatever one product a lender happens to sell.
That said, more access doesn’t automatically mean a better outcome. A dozen programs are only useful if someone actually walks you through the tradeoffs of each one. That includes telling you when a smaller, cleaner program beats a flashier one. Access to more programs only helps if your loan officer also understands the nuances between them well enough to explain the pros and cons clearly.
Frequently Asked Questions
On a conventional loan, the minimum is 3% of the sales price. For a $500,000 home, that’s $15,000. Add closing costs, and the all-in total typically lands around $23,000 to $25,000. FHA loans have their own minimum, which is a different number entirely.
It depends on the program. Grants and fully forgiven second mortgages skip repayment entirely, as long as you meet the program’s terms. That usually means staying in the home for a set period. Deferred, repayable, and shared-equity programs all involve repayment in some form: a lump sum at sale, monthly payments, or a share of your home’s appreciation.
Some programs require it, but plenty don’t. It varies program to program, so it’s worth checking rather than assuming either way.
Yes, many programs pair specifically with FHA loans. Others pair with conventional loans instead, and a few work with both. This is exactly why it matters to check a program’s guidelines before assuming it fits your situation.
The catch, if there is one, is almost always in the repayment terms rather than the dollar amount. A program advertising a large assistance figure might come with a long forgiveness period, a shared-appreciation split, or restrictions on loan type. Reading the fine print matters more than the headline number.
Program guidelines vary by state, county, income, and loan type. The fastest way to find out is to talk with a loan officer who has access to multiple programs. They can match your situation against them, rather than leaving you to search program by program on your own.
Talk to someone who knows the fine print
Down payment assistance programs have helped a lot of my clients get into a home years sooner than they would have otherwise. But the right program depends entirely on your situation. If you want to talk through what you might qualify for, you can reach out to me directly. You can also browse the full Pride Lending team to find a loan officer licensed in your state.
