Down Payment and Closing Cost Assistance

Updated 2026-05-17

Down Payment Assistance (DPA) and Closing Cost Assistance refer to financial aid or programs designed to help homebuyers cover the initial down payment and the various fees associated with finalizing a mortgage loan and transferring property ownership. These costs can be significant barriers to homeownership, especially for First Time Homebuyers and those with limited savings. Assistance programs help make homeownership more accessible.

The down payment is typically a percentage of the home's purchase price, while closing costs can range from 2% to 5% of the loan amount. Closing costs include items such as origination fees, appraisal fees, title insurance, attorney fees, and recording fees.

These programs are often offered by state and local housing finance agencies, non-profit organizations, or through federal initiatives.

Forms of Assistance

Both down payment and closing cost assistance can come in various forms, including:

• Grants: Funds that do not need to be repaid.
• Forgivable Loans: Loans that are forgiven after a certain period if the borrower meets specific conditions (e.g., remains in the home for a set number of years).
• Deferred Loans / Second Mortgages: Loans that are subordinate to the primary mortgage, where repayment is postponed until a future event, such as the sale or refinancing of the home. These may be interest-free or accrue interest, and often have forgivable terms if conditions are met.
• Low-Interest Loans: Loans with favorable interest rates that are repaid over time.

Examples and Considerations

The Hometown Heroes Housing Program in Florida offers both Down Payment Assistance and Down Payment and Closing Cost Assistance to eligible essential workers. This assistance is structured as a 0%, non-amortizing, 30-year Simultaneous Second-Lien Loans and Deferred Second Mortgages, providing up to 5% of the first mortgage loan amount (maximum $25,000).

It is important to note that certain loan types, such as VA Loan Entitlement, Certificate of Eligibility (COE), and Loan Guaranty Certificate (LGC)s and Federal Housing Administration (FHA), often do not require a down payment, thereby reducing or eliminating the need for down payment assistance for eligible borrowers. For instance, VA Loan Entitlement, Certificate of Eligibility (COE), and Loan Guaranty Certificate (LGC)s also typically do not require a down payment for the Veteran's portion.

References

1. Guide to Joint VA Loans — veteransunited.com