Down Payment Programs You Can Use Now To Get a Foot Into the Housing Market

Of all the hurdles keeping buyers out of the game, saving enough for a down payment seems to be one of the highest these days.

The typical down payment on a home currently stands at $27,100, according to the Realtor.com® second-quarter Down Payment Report of 2026. 

While this figure is lower than it was in 2025, it’s still a substantial sum that could take years to save up, especially if you’re trying to pay off debt while keeping up with the rising costs of everyday expenses. 

That’s where down payment assistance (DPA) and low-down payment programs come in. They can make it easier and more affordable to buy a home.

“Down payment assistance programs are the state or federal government's way of bridging the homeownership affordability gap for Americans. They’re useful because they reduce the burden of saving enough to cover a home’s total cash-to-close costs, which is one of the biggest barriers buyers face in today’s economy,” says Isaac Schultz, home loan specialist at Churchill Mortgage in Brentwood, TN.

By educating yourself on the different down payment programs available and determining which ones you qualify for, you could reduce the amount you need to save and potentially become a homeowner sooner than you ever thought possible.

Federal programs 

There are several government-backed programs with low or no down-payment requirements, including:

FHA loans

Insured by the Federal Housing Administration (FHA), FHA loans do require a minimum 3.5% down payment but come with flexible credit score requirements and higher debt ratios than conventional loans.  

Note that despite their low down payment requirement, FHA loans do require an upfront mortgage insurance premium and monthly insurance premium. 

VA loans 

Partially guaranteed by the U.S. Department of Veterans Affairs (VA), VA loans offer 100% financing with no money down to veterans or active-duty service members with full VA entitlement. 

There’s no mortgage insurance, but you will owe a funding fee, which can be reduced with a down payment of at least 5% or 10%. If you collect disability compensation, are an active-duty Purple Heart recipient, or surviving spouse receiving Dependency and Indemnity Compensation (DIC), you’ll be exempt from the fee.

USDA loans

Backed by the U.S. Department of Agriculture (USDA), USDA loans also provide 100% financing without a down payment, similar to VA loans. However, these loans are only available to buyers in specific geographic areas as they’re geared toward rural properties. 

USDA loans do have household income restrictions based on household size and require upfront and monthly mortgage insurance premiums.

Good Neighbor Next Door

The Good Neighbor Next Door program by the Department of Housing and Urban Development (HUD) provides firefighters, police officers, teachers and EMTs with the opportunity to buy an HUD-owned home with as little as $100 down. 

If you qualify, you may also receive up to 50% off a home when you agree to live in it for at least 36 months. HUD will forgive 1/36th of the forgivable balance for each month you live there.

State and local housing finance agency (HFA) initiatives

Typcially state-funded through local housing agencies, state and local programs are designed to encourage homeownership or  assist underserved borrowers. 

Some offer grants with no repayment. Others use zero-interest deferred second mortgages you must repay when you sell or refiance the home. You might also find loans that are forgivable after you live there for a set number of years.

“Michigan, for instance, has the Michigan State Housing Development Authority (MSHDA) overseeing its programs. The most notable and most frequently used program is the MI 10K DPA Loan,” Schultz explains.

A second loan of $10,000 is placed on the property to offset the total cash you need to close. You must occupy the home as your primary residence and have a debt-to-income (DTI) ratio of no higher than 45%. In addition, you’ll need to invest in 1% of the purchase price using your own funds. 

“The best thing you can do is talk to a local lender that understands these programs rather than try to unravel it all yourself. It's a bit like trying to understand laws without a lawyer. You can do it, but it's better to have counsel,” Schultz says.

Private equity and shared-equity alternatives

Shared appreciation programs essentially allow a company to invest cash into your home purchase to help offset your upfront cash to close. 

You generally don't make payments on yourinvestment, but when you sell or refinance, the investor receives a portion of the home's appreciation. 

“Personally, I don't love this option, as one of the single biggest advantages to home buying is appreciation and the benefit of gaining equity,” explains Schultz. 

If you do go this route, read the fine print to make sure you’re comfortable with the drawbacks and determine the benefits outweigh them.

How to qualify for down payment programs

“There are more than 2,000 DPA programs available nationwide and many are city, county or state-specific,” says Tanya Bates, senior vice president, home loans regional director at Bank of Oklahoma Mortgage at BOK Financial in Oklahoma City.

Eligibility requirements vary by program, state and lender, but most programs consider a similar set of factors. 

Oftentimes, they’re geared toward low- to moderate-income homebuyers so there’s typically an income cap that varies by program and depends on household size and location.

While DPA programs tend to favor first-time buyers, that’s not always a requirement. 

“If you haven’t owned a home within the last three years, many programs consider you a first-time homebuyer,” Bates explains.

Also, online or in-person homebuyer education courses are often required and typically cover topics such as budgeting, mortgage financing, and homeownership costs.

Factors such as employment,  creditworthiness and property location are usually considered as well. Schultz explains that the higher your credit score, the more options you have available to you. 

“Shoot for a 680 or better and avoid missed payments, collections, accounts, and bankruptcy if possible,” says Shultz.

Remember that requirements for down payment programs vary considerably, so even if you don’t qualify for one, you may be eligible for another. Most criteira is clearly posted online but if you’re unsure, reach out to a lender or agency directly for clarity.