First-Time Homebuyer Down Payment Assistance: What's Available in 2026

What types of down payment assistance exist?

Down payment assistance comes in four main forms: grants, forgivable second mortgages, deferred payment loans, and matched savings programs. Knowing which form you are being offered tells you whether you will ever have to pay the money back.

Grants

A grant is a gift from a program administrator that does not have to be repaid. State Housing Finance Agencies, nonprofit organizations, Federal Home Loan Bank programs and some employers offer grants. Some grants come with a requirement to stay in the home for a set period, so read the retention terms before you apply.

Forgivable second mortgages

A forgivable loan is a second mortgage that is forgiven after you meet a residency requirement. If you sell or refinance before forgiveness, you may owe some or all of it back. The length of the residency requirement and the repayment rule differ by program.

Deferred payment loans

A deferred loan is a second mortgage with repayment postponed until an event such as a sale, a refinance or the payoff of the first mortgage. Program terms decide whether interest accrues, so ask for the written terms.

Matched savings programs

Matched savings programs add to your own savings according to a match rate the sponsor sets. The match rate, the savings period and any homebuyer education requirement are set by the sponsor, so ask for the written terms.

Who counts as a first-time homebuyer?

It depends on the program, and some use a look-back period instead of "never owned." Fannie Mae's Selling Guide, for example, counts a borrower who "had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property." Because definitions differ, someone who owned a home years ago and has rented since may still qualify under one program and not another. Ask each program administrator for its exact definition.

How much do first-time buyers actually put down?

The median first-time buyer put 10% down, according to the National Association of Realtors' 2025 Profile of Home Buyers and Sellers (released November 4, 2025). That median was 9% in the 2024 edition. The same NAR survey found that first-time buyers paid for the down payment mostly from personal savings (59%), followed by other financial assets such as retirement accounts, stocks or cryptocurrency (26%) and gifts or loans from family and friends (22%).

For scale, NAR reported a national median existing-home price of $417,500 for September 2026. On that price, 3% down is $12,525 and 20% down is $83,500 (this is arithmetic on NAR's price, not a program figure). Your price, loan program and market will differ.

The down payment is not the only cash due at closing. The Consumer Financial Protection Bureau (CFPB) defines closing costs as "total upfront costs associated with your loan and real estate transaction, excluding your down payment." Freddie Mac says to be ready to pay between 2% and 5% of the purchase price in closing fees (reviewed February 26, 2026). A different data set, LodeStar Software Solutions' quote data for 2025, reports a national average of $4,528 (1.04% of price), but that count leaves out prepaids and escrow deposits, so it is lower than Freddie Mac's range by design. For the full cash picture, see our cash to close guide, closing costs explained for first-time buyers, how to lower your cash to close and down payment versus closing costs.

Which mortgage programs allow a low down payment?

FHA, Fannie Mae and Freddie Mac low-down-payment options start at 3% to 3.5% down, and VA and USDA loans can require no down payment at all. The loan program you choose changes how much cash you need before any assistance is added.

Two cautions apply to the table. First, a low down payment does not remove other costs: FHA loans carry mortgage insurance premiums, and so do conventional loans with very small down payments, so compare the monthly payment and not just the cash due. Second, FHA's credit score requirements for the 3.5% option are set by HUD's handbook and by individual lenders, so ask a lender what your score allows.

HUD itself does not hand out down payment grants to buyers. Its state page says "HUD has no direct grant programs to homebuyers for downpayment or closing cost assistance" and that it provides grants to state and local governments, so buyers look to state and local agencies, lenders, employers and nonprofits for help.

What do state housing finance agency programs offer?

State Housing Finance Agencies (HFAs) run first-time buyer programs that can combine a mortgage with down payment help, but each state designs its own. The National Council of State Housing Agencies (NCSHA) says "each HFA was created by its state to meet its own specific housing needs, so no two are exactly alike," and reports that 85% of HFA-supported owners are first-time buyers.

Because programs differ, these are the questions to put to any state program before you plan around it:

• How much help is offered, and is it a grant, a forgivable loan or a deferred loan?
• What are the income limits for your county and household size?
• Are there purchase price limits in your county?
• Is homebuyer education required?
• Which lenders participate, and does your lender?
• Is there a funding window, or is money first-come, first-served?

To find your state's program, search for your state's housing finance agency and first-time homebuyer, or start at NCSHA's site. Our state-by-state guide to DPA programs in NJ, NY, CA, TX, FL and PA walks through six states in detail.

Does the Federal Home Loan Bank offer down payment grants?

Yes. FHLB New York's Homebuyer Dream Program (HDP) gives down payment and closing cost grants to eligible first-time buyers through participating member institutions. Its 2026 guidelines say the maximum grant is "up to $30,000, as determined by the member," that households must earn "at or below 80% of the Area Median Income," and that one homebuyer must have "completed a homeownership counseling program within 18 months prior to the reservation request date." The retention period for HDP households is five years from closing. The 2026 round ends November 27, 2026, or when funds run out.

The program is administered by FHLB New York and its participating members, so whether you can use it depends on your lender and where you live. Ask your lender whether the Federal Home Loan Bank for your region offers a similar program. For more, read what the FHLB Homebuyer Dream Program is and how to apply.

Can your employer help with a down payment?

Some employers offer housing assistance. Employer contributions are not currently supported on Dreamfund.

On the lending side, Fannie Mae's Selling Guide says a borrower "may use funds provided by an employer to fund all or part of the down payment or closing costs" on a principal residence. The guide requires documentation showing an established company program, not an accommodation developed for one employee, along with the dollar amount and that the borrower received the funds directly from the employer. To find out whether yours offers anything, ask your HR department. Our guide to employer-assisted housing explains the common structures.

Can family and friends give you money for a down payment?

Yes. In fact, 22% of first-time buyers received a gift or loan from family or friends toward their down payment (NAR, 2025 Profile of Home Buyers and Sellers). For conventional loans, Fannie Mae's Selling Guide says gift funds "may fund all or part of the down payment, closing costs, or financial reserves," and that gifts "must be evidenced by a letter signed by the donor, called a gift letter." The letter states the amount, that no repayment is expected, and the donor's name, address, phone number and relationship to the buyer, and the lender verifies the donor's funds or the transfer.

Other loan programs and individual lenders can ask for more, so treat the lender's list as the final word. Money that moves through personal payment apps with no record of where it came from is harder to document, which is why keeping a record of each gift from the start helps. Our guide to gift letter requirements walks through the details.

Dreamfund has not launched yet and is building tools for this step. Each gift is recorded with who gave it, their relationship to the buyer, and a signed no-repayment attestation. The buyer's lender decides what gift documentation it accepts.

How do you combine several sources of assistance?

Choose your loan program first, then check which assistance sources that program and your lender allow together. Rules on combining sources differ by loan program and program administrator, so confirm each combination in writing before you build a plan around it.

1. Choose your mortgage program first
   The loan program can determine which sources are compatible and how much can come from gifts versus grants. Talk to a HUD-approved housing counselor or a mortgage professional before committing to one.
2. Look up your state HFA program early
   Ask the agency whether its program runs through participating lenders, whether it has funding windows, and what the application steps are before you make an offer on a home.
3. Ask your employer about housing assistance
   A short conversation with HR will tell you whether any benefit exists and whether it can be combined with other help.
4. Check Federal Home Loan Bank funding
   If your lender is a participating member and your income qualifies, a grant such as FHLB New York's HDP may be available. Funding windows apply, so coordinate timing with your lender.
5. Ask family and friends who want to help
   Once you know your target number and your lender's gift rules, tell supporters how gifts should be documented before any money moves.
6. Gather the documentation
   Your lender will want gift letters, grant award letters and any employer program confirmation before underwriting is complete. Fannie Mae's guide says a grant needs an award letter stating repayment is not expected. Ask your lender for its timeline and checklist.

For a look at how these sources add up in practice, see our guide to how much down payment you need in 2026, and the hubs on down payment assistance and first-time homebuyer basics.

What mistakes cost first-time buyers the most?

The costliest mistakes come from timing and paperwork, not from eligibility. A few to avoid:

• Applying after you sign a purchase contract. Some programs have rules about when you apply relative to signing a contract, so ask the administrator first.
• Letting gift money arrive with no record. Lenders verify the source of gift funds, so write down who gave what and when from the first dollar.
• Assuming you earn too much. Income limits depend on the program and the county. Check the limit that applies to you before ruling a program out.
• Using a lender that does not participate. Ask your lender directly whether it is approved for the specific program you want.

What else do first-time buyers ask about down payment assistance?

Sources

• Fannie Mae Selling Guide, first-time homebuyer definition
• Fannie Mae Selling Guide B3-4.3-04, personal gifts
• Fannie Mae Selling Guide B3-4.3-06, grants and lender contributions
• Fannie Mae Selling Guide B3-4.3-08, employer assistance
• Fannie Mae HomeReady
• Freddie Mac Home Possible
• Freddie Mac HomeOne
• Freddie Mac, what are closing costs
• HUD, FHA loans
• HUD, New Jersey state page
• VA purchase loan
• USDA Rural Development guaranteed loan program
• FHLB New York Homebuyer Dream Program guidelines
• NAR, 2025 first-time buyer press release
• NAR, 2024 first-time buyer press release
• NAR, September 2026 existing-home sales
• NCSHA, HFAs at the Center, July 2026
• CFPB, Closing Disclosure explainer
• LodeStar Software Solutions, 2024 vs 2025 closing cost report