Before you decide you can’t afford a home, look up the down payment assistance offered by your state’s housing finance agency and your city or county. Many programs give grants or forgivable loans that can cover most of a minimum down payment, and a forgivable loan shrinks for every year you live in the home.
The 20% down payment many renters think they need is a benchmark, not a requirement. A government-backed FHA loan requires 3.5% down at minimum, which is $10,500 on a $300,000 home, and down payment assistance exists to close gaps that size.
The trade-off is mortgage insurance, which protects the lender if you stop paying. On that home, FHA charges about $5,100 up front, usually added to the loan, and about $130 a month at first for the life of the loan.
Down Payment Resource, which tracks these programs, counted 2,746 nationwide as of July 2026. Cities and counties run the most. The programs aren’t only for low earners or first-timers. By the company’s count, 62% serve households with incomes above $100,000.
Most programs are second loans rather than grants, so read the terms. A forgivable loan is written off over a set period, but moving out before it ends means repaying the rest. A deferred loan needs no payments until you sell, refinance, or move out, while a low-rate loan adds a monthly payment.
Start with your state housing finance agency’s website, which lists its programs and the lenders approved to offer them. Then see what your city and county housing departments offer. For each program, check:
- Whether you count as a first-time buyer, which usually means you haven’t owned a home in three years
- How long you must live in the home, and what you’d owe if you sell or refinance
- Whether your income and the home’s price fall under its limits
- What else it requires, such as a homebuyer education course or a minimum contribution of your own
Say a program gives you a $9,000 forgivable loan on that $300,000 home, with 20% forgiven each year for five years. You’d bring $1,500 of the $10,500 down payment plus closing costs, and owe nothing on the assistance after five years in the home. Sell after two years, and you’d repay the $5,400 not yet forgiven.
Run this check before you set a savings goal. The number to save toward is what’s left after assistance, not 20% of the price.
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