How to Get the Cash You Need to Buy a Home

Down payment and closing cost assistance may provide the boost you need to become a homeowner.

Cash for a down payment and closing costs can seem like an unsurmountable obstacle for some first-time buyers. But two things may help: First, you may need less money than you think. Second, you may be surprised to find that you can qualify for homebuyer assistance programs.

Let’s bust that first myth right now: More than half of Americans (62%) believe that they need to make a 20% down payment to buy a home, according to the 2025 Home Buyer Report from personal finance site NerdWallet. That’s just not true.

Not having enough money for a down payment is a major deterrent to one-third of prospective buyers in NerdWallet’s report, so that misunderstanding about how much they need could be keeping qualified buyers out of the market.

Here are the facts: The median down payment for first-time buyers was 9% in 2024, according to the National Association of Realtors. For all buyers, the median down payment was 18%. That’s the highest down payment for first-time buyers since 1997.

More facts: Conventional loans are available to borrowers with a down payment as low as 3% in some circumstances. Government-backed loans are available to borrowers with a down payment as low as 3.5% from the FHA (Federal Housing Administration) and with zero down payment from the VA (Veterans Administration) and the USDA (Dept. of Agriculture Rural Development loans).

Just to put this in perspective, if you’re buying a median-priced home for about $400,000, a down payment of 3% would be $12,000. That compares to $80,000 if you were required to make a 20% down payment.

Still, you need some cash to buy a home for your down payment, plus 2% to 5% for closing costs. So, on that $400,000 house, you may need at least $20,000 for the minimum down payment and the lowest closing costs.

The Magic of Homeownership Assistance

Even though you need less cash than you thought, you can still look for sources for money besides your savings. While many people believe you need a low income to qualify for down payment assistance, the limits are based on local income and housing costs, not national numbers. That means sometimes income limits can be surprisingly high.

Not only that, but there are also many sources of cash to encourage homeownership.

As of the fourth quarter of 2024, there were 2,466 programs available nationwide, 81% of which were actively funded, according to Down Payment Resource’s Q4 2024 Homeownership Program Index (HPI) report.

“There are more than a dozen sources of homebuyer assistance programs,” says Rob Chrane, CEO of Down Payment Resource, a site that helps prospective buyers search for programs in their area. “Local municipalities, such as cities and counties, are the most common providers, supporting 968 of all programs nationwide (39%). Nonprofits offer 525 programs (21%), while state housing finance agencies (HFAs) provide 463 programs (19%). Additionally, employers, local housing authorities, and even some lenders offer assistance to help homebuyers bridge the affordability gap.”

To find a program, you can ask lenders and real estate agents in your area, and search for homeownership programs online through DownPaymentResource.com .

How Homeownership Assistance Works

Despite the name, down payment assistance programs can do much more than cover just the down payment, Chrane says.

“Many programs can also help with closing costs, prepaid expenses, buying down the mortgage interest rate, and even lessen mortgage insurance expenses,” he says. “In some cases, buyers can combine multiple programs for even greater savings.”

Now that buyers may sometimes be responsible for direct payment of their real estate agent fees , you may want to look into using homeownership assistance funds to cover that cost.

“Currently, we're aware of 67 programs that allow their funds to be used to pay a buyer's agent commission,” Chrane says. “That's a new trend and several factors impact an agency's allowance for this, but we're monitoring for more.”

Funds for down payment and closing costs are available as either a loan or a grant depending on the program. Grants, which are funds given to homebuyers free and clear, were available from 177 programs nationwide during the fourth quarter of 2024, according to Chrane. 

“The majority of down payment assistance programs (DPAs) — 57% — come in the form of low- or zero-interest second mortgage loans,” he says. “Notably, 80% of DPAs have deferred payments, meaning borrowers don’t make monthly payments, and the balance is typically due when they sell or refinance or the loan matures. Many of these loans are also forgivable. Fifty-four percent of DPAs offer partial or full forgiveness over time, as long as the homeowner meets certain requirements, such as maintaining primary residency.”

Combining Homeowner Assistance with Other House Hacks

Many buyers searching for affordability look at a variety of options to increase the possibility of homeownership. Fortunately, some of those options, such as house hacking, can be combined with homeownership assistance.

“One third of programs support the purchase of multifamily homes,” Chrane says. “This means homebuyers can achieve homeownership while also generating rental income to offset their mortgage costs and build wealth over time.”

It’s also possible to use down payment assistance to buy a manufactured home.

“It’s more common than people realize,” Chrane says. “Our data shows that 37% of down payment assistance programs — nearly 1,000 nationwide — support the purchase of a manufactured home, making homeownership more accessible among rising affordability challenges.”

How to Qualify for Down Payment Assistance

While programs vary from one provider and location to another, there are a few common elements that impact whether you can qualify for homeownership assistance.

Some of the requirements to check include:

First-time buyer status: A substantial number of programs (38%) are open to repeat buyers, Chrane says. “Even for programs that do have a first-time homebuyer requirement, it’s important to know that ‘first-time home buyer’ is defined as someone who hasn’t owned a home in the past three years,” he says. “That means many people who previously owned a home may still qualify.”

Income limits: Most programs (91%) have income limits, but these limits vary widely and are often higher than people expect, Chrane says. “In many cases, the cutoff is based on the area median income (AMI), which means buyers earning a solid income may still qualify,” he says. “It’s worth exploring options even if you think you earn too much.”

Credit scores: Most programs have minimum credit score requirements, but they typically align with the FICO score needed to qualify for a mortgage, Chrane says. Some programs have more flexible credit requirements, so buyers who are close to qualifying shouldn’t assume they’re out of options.

Home price limits: Most programs do set home price limits, but these limits are usually based on local market conditions rather than a fixed national cap, Chrane says. That means they can be more generous in higher-cost areas, making assistance accessible even in competitive housing markets.

Primary home: Most assistance programs are designed for owner-occupied homes, meaning buyers must commit to using the property as their primary residence, Chrane says.

Mortgage qualification: In most cases, buyers need to qualify for a primary mortgage, Chrane says. Many programs also require applicants to work with an approved lender and apply through an authorized provider.

Homebuyer education: Most programs require buyers to complete a homebuyer education course before they can qualify for homeownership assistance.

Future of Homeowner Assistance Programs

Down payment and closing cost assistance programs often rely fully or in part on government funding. Sometimes, demand for assistance is so high that funding runs out and programs temporarily close until a new budget is approved or a new source of funding is identified.

Given the policy changes around housing coming from the federal government under the new administration, some programs may struggle to find funding if they rely on federal money. Down Payment Resource estimates that about one-third of homebuyer assistance programs could be impacted that rely on federal government programs for funding.

However, Chrane says it’s too soon to know the outcome of federal policy changes on homeownership programs in general. State and local governments will likely be adapting to a variety of policy changes from the federal government in the coming years.

Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool Corporation. Whirlpool Corporation takes sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.