Owning a home is a dream for many, but saving for that big down payment can feel impossible. With home prices climbing and rent taking a big bite out of your savings, it’s easy to feel discouraged.
But here’s the good news: every state has programs offering grants or loans to help you gather the funds you need. Let’s break down how you can tap into those resources and take a big step toward making your dream home a reality.
The Struggle of Sky-High Home Prices
Buying a home has never been more expensive. The median home price in the U.S. is now over $400,000, which means buyers traditionally need 20% down—or $80,000. Even smaller down payments of 5% or 10% are tough to cover as rents keep climbing.
Teig Whaley-Smith from the Community Development Alliance says it best: for many working families, saving even a small down payment feels “next to impossible.” And with mortgage rates hovering near 7% for a 30-year loan, the dream of owning a home seems even further out of reach.
Down-Payment Assistance Programs
Many buyers don’t realize there are programs designed to help them. Those programs are:
- Grants: Free money that doesn’t need to be repaid.
- Low-Interest Loans: Second mortgages with payments often deferred until you sell the home.
- Zero-Down Loans: Offered by federal agencies like the Department of Veterans Affairs and the Department of Agriculture for eligible individuals.
According to the National Association of Realtors, the average first-time buyer in 2024 made a down payment of just 9%. The myth that you need 20% upfront discourages many from pursuing their homeownership goals.
Finding the Right Program
With over 1,600 programs across the country, identifying the right one can be difficult. Programs vary by state, income level and other criteria. Here are some steps to get started using online tools:
- Freddie Mac’s DPA One: A tool for lenders and housing counselors to match buyers with programs.
- Down Payment Resource: A platform where buyers can input their details to find available assistance.
- State Housing Authorities: Contact your state’s housing finance agency to learn about local options.
- Certified Housing Counselors: The Department of Housing and Urban Development (HUD) provides a directory of agencies that can guide you through the process.
Real-Life Success Stories
Nonprofit organizations like Acts Housing help buyers navigate assistance programs. For example, one Milwaukee buyer recently secured $19,500 in combined grants and loans, allowing her to buy a duplex with less than $700 out of pocket. Get all the grants you deserve, urges Deatra Kemp of Acts Housing.
Another buyer, Latoya Myrick, achieved her dream of homeownership with the help of assistance programs. She closed on a $200,000 duplex using a mix of federal and local grants to cover her down payment.
Other Ways to Fund a Down Payment
- Family Gifts: Many lenders allow gifts from relatives to be used as part of your down payment. Ensure the donor provides a signed letter stating the money doesn’t need to be repaid.
- Private Lender Programs: Some banks provide grants for down payments or closing costs in targeted areas. For example, Chase provides up to $7,500 in eligible neighborhoods.
Things to Watch Out For
While assistance programs are a boon, working with reputable lenders is essential. Predatory practices, like higher interest rates for buyers using down-payment help, can hurt borrowers in the long run. Partnering with certified housing counselors can protect you from such risks.
Take Action Today
If homeownership feels out of reach, don’t give up. Explore down-payment assistance programs, seek advice from certified counselors and use tools like DPA One or Down Payment Resource. With persistence and the right resources, you can make your dream of owning a home a reality.
