Down Payment Assistance (DPA) programs are a great solution for potential home buyers who can make their monthly mortgage payments, but don’t have the savings for a down payment.  Many states, counties and cities offer grants and no-interest loans to help home buyers pay for down payments and closing costs. Morty is pleased to be able to offer multiple DPA programs through our platform in partnership with multiple lenders on our network.

What is a DPA Program?

DPA programs come in a variety of forms:

• Grants An outright gift of money that does not need to be repaid
• Low-interest loans. A loan, separate from the mortgage, that covers the down payment and closing costs and is repaid over a number of years.
• Zero-interest, forgivable loans. These loans do not have to be repaid as long as the borrower meets a set of criteria. One common criteria is maintaining the home as a primary residence for a certain number of years. 
• Zero-interest, deferred-payment loans. A loan that covers the down payment and costs that does not need to be repaid until a specified loan event such as: the home is sold, the mortgage is refinanced and the mortgage reaches the end of the term.

Although many down payment assistance programs are geared to first-time home buyers, more than a third of homeownership programs are open to eligible repeat buyers!

Who Sponsors DPA Programs?

DPA programs are offered through local and state programs or directly through the lender. Programs offered by lenders tend to be offered in any state where the lender is licensed to do business whereas local programs are confined to specific localities.

Local Municipality Programs
There are over 2300 municipal DPA programs offered around the country. 

Image Credit: Downpayment Resource

Morty’s lenders will accept most local programs that do not affect their first lien position and are applied for by the broker on behalf of the homebuyer.

Lender Specific Programs
Homebuyers also benefit from lender specific DPA programs that are nationally available to those who qualify. Most lender specific DPA programs support FHA loans, although there are some select programs that cover conventional loans. There are many lender specific DPA offerings that can be combined with high LTV FHA loans which have more stringent qualification requirements, particularly related to borrower and home eligibility, but can be a great solution for your homebuyer!

Morty’s platform is able to support both FHA and conventional DPA programs. To assess which programs may fit your homebuyer’s needs and qualification parameters, review both the specifics of each DPA program and which lender offers them.

DPA FAQs

Can DPA programs affect closing timelines?
Yes, at times these programs can take longer and require further underwriting steps later in the process. It’s important to have this conversation with homebuyers early on in their journey to make sure they understand the challenges and benefits of DPA.

How can I help homebuyers find DPA programs?
There are several resources in addition to Morty Lender’s resources we’ve already highlighted: 

• City and county governments. Many cities and counties offer down payment assistance via their websites. 
• The U.S. Department of Housing and Urban Development. Homebuyers can visit the local homebuying programs page on HUD’s website and see a list of programs by state.
• Down Payment Resource. This tool can help find programs in a homebuyer’s specific area.

Do you have to be a first-time homebuyer to get DPA?
No! Many programs allow non-first time homebuyers to qualify. It’s important to be aware of all DPA criteria, especially with lender specific DPA, when advising homebuyers on which DPA program to pursue. 

Can homebuyers use multiple forms of DPA?
In most cases yes, provided the homebuyer qualifies and no DPA program requires exclusivity. You also must be sure that any DPA program does not affect the lender’s first lien position. 

Can our lenders work with a DPA program that requires lender approval?
A majority of Morty’s lenders do not accept DPA programs where they must be “approved lenders” ; however, certain lenders will allow DPA programs on a case by case basis.