Down payment assistance on an FHA-insured loan

Quick insights

For homebuyers, the biggest hurdle may not be qualifying for a mortgage. It might be coming up with the cash to close. Even with an FHA-insured loan’s lower down payment requirements, covering the upfront costs can make buying a home feel out of reach. While the FHA doesn’t offer a down payment assistance program, there could be support available to reduce how much money you need to bring to the table.

Can you get down payment assistance with an FHA loan?

Down payment assistance usually means a program that helps a homebuyer cover some of the upfront costs tied to buying a home using an FHA loan. While the Federal Housing Administration does not give you this money directly, you can pair your FHA-insured loan with financial help from other groups: state agencies, local government programs or approved nonprofit organizations.

The FHA requires the borrower’s 3.5% Minimum Required Investment (MRI) to come from an eligible source and prohibits the MRI from being funded by the seller or any party with a direct or indirect financial interest in the transaction. Government entities acting in their governmental capacity may provide the MRI through eligible homeownership assistance programs.

First-time homebuyer grants may lower your costs. If you live in an expensive market like California, for example, there may be state-specific grants or special loans. If approved, assistance may be used toward the down payment, closing costs or other eligible homebuying expenses, depending on the program’s guidelines.

How does down payment assistance work on an FHA-insured loan?

Down payment assistance gives you money to help cover the upfront costs of buying a home. The FHA does not provide this money directly. Instead, you can get it from state agencies, local governments, employers, or nonprofits. You usually apply for this help at the same time you apply for your FHA-insured loan.

While the process can vary, it may look something like this:

This financial help can come in different forms, such as a grant that you do not have to pay back. You may also get a certain type of loan with low interest or delayed payments. Every program has different rules. Chase Home Lending Advisors can help you review your homebuying options.

Can down payment assistance help with closing costs too?

In many cases, yes, down payment assistance can go toward closing costs, which are often 2-5% of your loan amount. This can matter because closing costs often include:

Reducing these expenses upfront can help buyers preserve savings for moving costs, emergencies or home repairs.

Requirements for down payment assistance programs

Eligibility often depends on the specific down payment assistance program. Each organization sets its own requirements.

Here are some examples of criteria homebuyers seeking down payment assistance may also need to meet:

FHA-insured loans also have their own financial qualification criteria and FHA minimum property standards. These rules are similar regardless of where you’re buying a home in the United States. However, down payment assistance program guidelines can vary widely. Two homebuyers in the same city could see different outcomes depending on the program they apply for.

Types of down payment assistance programs

Not all down payment assistance programs are structured the same way. Depending on the state, city or organization, the support may look a little different. Learning the variations may help set clearer expectations before applying.

Here are some examples of state-based down payment assistance programs:

Where to find down payment assistance programs

Down payment assistance programs are often location-based, which means the options available may vary depending on where you plan to buy a home. Because of this, it can be helpful to explore multiple sources to see what you may qualify for and how different programs could work with an FHA-insured loan.

Local programs

Many of the most common down payment assistance options come from state and local housing agencies. These programs may be designed specifically for first-time homebuyers or households within certain income limits. Local city or county housing departments may also offer targeted programs that can sometimes be layered with FHA financing, depending on the rules.

HUD’s nonprofit and state directory

The U.S. Department of Housing and Urban Development (HUD)Opens overlay provides resources that can help prospective homebuyers connect with approved housing counseling agencies and local assistance programs. These tools may help you identify:

Mortgage lenders

Some FHA-approved lenders may be familiar with down payment assistance programs available in your area. Working with them can help you understand the availability and eligibility requirements. Usually, mortgage lenders may work directly with certain state or local programs. This can help streamline the application process when pairing assistance with an FHA-insured loan.

Chase Home Lending Advisors help homebuyers identify and apply for programs they may qualify for.

Employer-sponsored assistance

Some employers offer benefits to help you buy a home, such as down payment assistance or matched savings programs. While these perks are less common, you might find them at large companies or government agencies. This financial help might come as a grant, a special loan or a savings match. Your company’s HR department should be able to confirm if your company offers any housing benefits.

In summary

Down payment assistance provides valuable support if you are ready to buy a home but need help saving for upfront costs. While these programs vary, learning about your options early helps you plan with confidence. You can also use a lender’s resources to find the right financial help.

Chase offers FHA loan options along with a homebuyer assistance finder tool that may help borrowers discover programs they could qualify for based on location and situation.

If you have questions about eligibility or want to learn more about your options, Chase Home Lending Advisors are here to help.