Guide to Down Payment Assistance Programs

Down payment assistance (DPA) programs give eligible homebuyers grants, low-interest loans or forgivable second mortgages to cover the down payment and closing costs. More than 2,800 programs operate nationwide through state housing finance agencies, local governments and nonprofits.

At Bentley's Real Estate, we help buyers in Greater Newburyport find the help that fits their purchase.

The main types of down payment assistance

Finding that fit starts with the five main forms of DPA, since each shapes what you owe after closing.

Type	How it works	What to watch
Grants	Gift funds you do not pay back	Smaller amounts, limited funds
Forgivable loans	Second mortgage forgiven over time, typically 3 to 10 years	Selling early can trigger repayment
Deferred-payment loans	No monthly payment; repaid when you sell, refinance or pay off the first loan	Less equity at sale
Low-interest second mortgages	Repaid monthly alongside the first loan	Adds to your monthly payments
Matched savings (IDAs)	Matches your savings toward a purchase	Takes time to build

Ask each program what happens if you sell or refinance in year two.

The answer shows you the real cost.

Which type of assistance fits you

Once you know that cost, the right program comes down to how long you will stay and what monthly payment you can carry.

• Choose a grant when funds are available. You repay nothing, though amounts run smaller.
• Choose a forgivable loan when you expect to stay past the forgiveness period.
• Choose a deferred-payment loan when cash flow matters most today, accepting less equity at sale.
• Choose a second mortgage when you need more and can carry a second payment.

Who can qualify for down payment assistance

None of those choices matter until you qualify.

Most programs share five eligibility requirements.

• First-time homebuyer status: often defined as not owning a home in the past 3 years, though about 38% of programs allow repeat buyers.
• Income limits: household income is typically capped between 80% and 120% of the area median income.
• Credit score: commonly 620 to 680 for state and local programs; FHA-backed options may accept 580.
• Property: a primary residence, from condos to up to 4-unit properties.
• Homebuyer education: almost every program requires a HUD-approved course before closing.

Which mortgage loans pair with DPA

Once you qualify, the next question is your first mortgage, because DPA pairs with common low-down-payment loans.

Loan	Minimum down payment	How DPA helps
FHA	3.5% with a 580+ score	Can cover the full down payment
Conventional (Fannie Mae HomeReady)	3%	Covers the down payment and some costs
VA and USDA	0% for eligible borrowers	Funds go toward closing costs and prepaids

Your lender needs approval for the specific program, so pick the lender and the program together.

How to apply, step by step

From there, applying follows five steps, most of them run by that lender.

1. Find a lender approved for the program.
2. Get pre-approved to set your price range.
3. Complete a certified homebuyer education course.
4. Apply for assistance; your loan officer submits it with your mortgage paperwork.
5. Close and follow occupancy rules, such as living in the home for a set number of years.

Pros and cons of using assistance

Before you commit, weigh what you gain against what you give up.

Pros	Cons
Buy sooner with less cash upfront	Income and price limits narrow your options
Keep savings for repairs	Extra paperwork can lengthen the timeline
Some funds never need to be repaid	Repayment terms can surprise you at sale

Down payment assistance in Greater Newburyport

Those tradeoffs play out locally. Massachusetts buyers can find state and local programs through a participating lender.

Amounts and limits change, so confirm current terms with your lender before you offer. We have been the #1 brokerage in Greater Newburyport by market share since 2019, and our agents know how assistance affects offer timing in Newburyport, Amesbury and nearby towns, and we connect buyers with local lenders and attorneys.

Talk it through

Lending, legal and tax questions belong with your lender, attorney or tax professional. To talk it through, call us at (978) 572-1200.