When you're ready to buy a home, the down payment can feel like a significant obstacle. Fortunately, Down Payment Assistance (DPA) programs are designed to help bridge this financial gap. These programs, often funded by state housing agencies, local governments, or nonprofits, can provide crucial financial support for covering down payments and sometimes closing costs.

​However, not all DPA programs are created equal. It’s essential to understand the distinctions between the types of assistance available. Knowing what’s being offered can make the difference between achieving affordable homeownership and facing unexpected financial challenges.

While eligibility criteria vary by program type and location, most DPA programs fall into two categories: second mortgages and grants. Let’s break them down further.

A second mortgage is a common form of DPA. It’s a loan placed on the home alongside your primary mortgage. While it provides the funds needed for your down payment, repayment terms vary based on the type of second mortgage you receive.

Grants are the most appealing form of DPA, as they provide funds with no repayment obligation. Essentially, this is free money to help you achieve homeownership.

Who Qualifies? Grants are often reserved for specific groups, such as first-time homebuyers or veterans. They tend to have stricter qualification criteria and may only be available in certain areas.

Maximize Your Chances: Be sure to ask about all grant options in your area. Understanding the qualifications can help you determine if this is a viable option for your down payment needs.​

Down Payment Assistance programs are invaluable tools for homebuyers. By understanding the differences between grants and second mortgages, you can make an informed decision that aligns with your financial situation and homeownership goals. Whether it’s “free money” from a grant or structured support through a second mortgage, the right program can help you afford the dream of homeownership with confidence.