Down payment information covers a portion of the cash you need upfront to buy a home, but not all of it and not always the full amount you might expect

The amount varies sharply depending on which program you use, where you live, and your income. Some programs cover 3 percent of the purchase price. Others cover up to 15 percent or more. A few cover closing costs on top of the down payment itself. Most require you to contribute something of your own—typically 1 to 3 percent—before information kicks in. The money usually comes as a grant (you do not repay it) or a forgivable loan (you repay it only if you sell the home within a set number of years).

The practical effect is this: if you are buying a $300,000 home and a program covers 5 percent of the purchase price, you receive $15,000. You still need to cover the remaining down payment from your own savings, plus closing costs unless the program includes those. Some programs stack—meaning you can combine a state program with a local one—but most lenders allow only one down payment information source per loan.

Key Takeaways

  • Down payment information typically covers between 3 and 15 percent of the home's purchase price, depending on the specific program and your location.
  • Most programs require you to contribute your own money first—usually 1 to 3 percent—before the information covers the rest of your down payment.
  • Grants do not require repayment, but forgivable loans must be repaid if you sell the home within a certain period, often 5 to 10 years.
  • Closing costs are sometimes included in information programs and sometimes not; you need to ask each program what it covers beyond the down payment itself.
  • Lender restrictions often prevent you from combining multiple down payment information programs on a single loan, even if you meet the requirements for both.

How much different program types cover

State and local government programs vary widely. Some state housing finance agencies offer grants that cover 5 to 10 percent of the purchase price. Others offer forgivable loans that cover 3 to 7 percent. A few states—including California, New York, and Massachusetts—have programs that cover up to 15 percent or more, but these often have income limits that exclude households above 80 to 100 percent of area median income. You find these through your state housing finance agency website or by searching "[your state] down payment information."

Employer programs typically cover 3 to 5 percent of the purchase price as a grant or forgivable loan. Some large employers—particularly in tech, finance, and healthcare—offer programs that cover up to 10 percent or even match a percentage of your savings. These are not common, and may be able to access usually requires you to work for the employer for a minimum period (often one to two years) and to buy within a certain distance of your workplace.

Nonprofit and community organization programs cover anywhere from 2 to 20 percent depending on the organization and the community. Some focus on first-time homebuyers in specific neighborhoods or income ranges. Others target teachers, healthcare workers, or other professions. The amount is often smaller than government programs but the income limits may be higher or the underwriting faster. You find these through NeighborWorks America or by contacting your local housing authority.

Lender-based programs (offered by banks and mortgage companies) typically cover 3 to 5 percent of the purchase price. These are often tied to specific loan products—such as FHA loans or conventional loans with the lender's own down payment information—and may have higher interest rates or require mortgage insurance even with a larger down payment. The trade-off is that you do not have to search multiple sources; the lender handles the paperwork.

The difference between grants and forgivable loans

A grant is money you do not repay under any circumstance. Once you close on the home, the funds are yours. Most state and local government programs offer grants, though some have restrictions—for example, you may have to stay in the home for a certain number of years or maintain it to a certain standard. If you violate the restriction, you may have to repay the grant, but the default is that you keep it.

A forgivable loan is a loan that disappears if you meet certain conditions, usually staying in the home for 5 to 10 years. If you sell before that period ends, you repay the loan in full from your sale proceeds. If you refinance, the loan typically becomes due when ready—you must repay it out of pocket or from the refinance proceeds. Forgivable loans are common in employer programs and some nonprofit programs. They are less common in government programs, which tend to offer grants instead.

The practical difference matters most if you plan to move or refinance within the forgiveness period. A $20,000 forgivable loan that becomes due when you refinance in year three means you need $20,000 in cash or equity to refinance, which many people do not have. A $20,000 grant has no such requirement.

What counts as "covered" and what does not

Down payment information covers the down payment itself—the cash you hand over at closing as a percentage of the purchase price. It does not automatically cover closing costs, which include appraisal fees, title insurance, attorney fees, property taxes, homeowners insurance, and lender fees. These typically run 2 to 5 percent of the purchase price on top of the down payment.

Some programs explicitly include closing costs in their coverage. For example, a program might say "up to 10 percent of the purchase price for down payment and closing costs combined." Others say "down payment only" and you must cover closing costs separately. A few programs offer a separate closing cost information component. You have to read the program details or call the administrator to know which applies.

Down payment information also does not cover the mortgage itself, property taxes, homeowners insurance, or HOA fees. It covers only the upfront cash you need to make the purchase happen. Some programs have income limits that affect how much they cover—a program might cover 10 percent for households under 60 percent of area median income but only 5 percent for households between 60 and 80 percent. The program rules determine this, not the lender.

How lender restrictions limit what you can receive

Most lenders allow you to use down payment information from one source only. If you meet the requirements for both a state program and a local nonprofit program, you cannot stack them to cover 20 percent of the down payment. You must choose one. Some lenders are stricter: they may not allow any down payment information at all, or they may allow it only from their own in-house program.

Lenders also sometimes reduce the amount of information you can receive based on the loan type. An FHA loan might allow 10 percent down payment information, while a conventional loan from the same lender allows only 5 percent. VA loans and USDA loans have their own rules about what information is permitted. If you are using a government-backed loan, check with your lender about their specific limits before you commit to a particular information program.

Some lenders require that down payment information come in the form of a grant, not a forgivable loan, because they want to avoid complications if you refinance. Others accept forgivable loans but charge a higher interest rate to offset the risk. These restrictions are not universal—they vary by lender and loan product—so it is worth asking your lender upfront what forms of information they accept and whether they have a preferred program.

How to find out what a specific program covers

The program administrator's website usually lists the coverage amount clearly, but the language can be confusing. Look for phrases like "up to X percent of the purchase price" or "up to $X in information." If the website does not specify, call the program directly. Ask three things: (1) What is the maximum amount or percentage this program covers? (2) Does it cover closing costs or down payment only? (3) Is it a grant or a forgivable loan, and if a loan, what is the forgiveness period?

Write down the answers. Then contact your lender and ask whether they accept that form of information and whether it counts toward your down payment requirement. For example, if a program covers 5 percent as a grant and your lender requires 10 percent down, you still need to contribute 5 percent of your own money. If the program covers 5 percent as a forgivable loan and you plan to refinance in three years, ask the lender whether the loan will be due at refinance (it usually will be).

Frequently Asked Questions

Can I use down payment information if I already have savings?

Yes. Most programs do not restrict you from using your own savings alongside information. In fact, many programs require you to contribute some of your own money first. The program covers a percentage of the purchase price, and you cover the rest from your savings, the information, or a combination of both.

Does down payment information affect my mortgage interest rate?

Not directly. The information itself does not change your rate. However, some lenders charge a higher rate for loans that include down payment information, particularly forgivable loans, because they view the loan as slightly riskier. Ask your lender whether they adjust the rate based on the information program you use.

What happens to down payment information if I sell the home?

If it is a grant, nothing—you keep the money. If it is a forgivable loan, you must repay it from your sale proceeds before you receive your profit. For example, if you received a $15,000 forgivable loan and sell the home five years later for a $50,000 profit, you repay the $15,000 and keep $35,000.

Can I combine down payment information from two different programs?

Most lenders do not allow stacking—using information from two programs on the same loan. Some lenders have exceptions, particularly if one program is a government program and the other is a nonprofit program, but this is uncommon. Ask your lender before you commit to a specific program.

Does down payment information count as income for tax purposes?

Grants typically do not count as taxable income. Forgivable loans also do not count as income when you receive them, but if the loan is forgiven, the forgiven amount may be taxable in that year. Consult a tax professional about your specific situation, as rules vary by program and state.