The Quick Read: It depends on the program, because no national list says which ones have money today. Most programs counted in the industry’s year-end tally were funded, but others were paused, on a waitlist or inactive. Funding runs out and reopens, so confirm availability before you build a purchase plan around any program. Four structures exist. The grant pairs with FHA first mortgages only. The forgivable and repayable second liens pair with FHA, USDA and HUD-184 first mortgages. The refinance-cost second lien helps with the closing costs of an FHA refinance.
What Does “Still Funded” Actually Mean?
A program is “funded” when it has money set aside that you can reserve for your purchase. A program that exists on paper but has no money does not help you. That gap is the whole story behind this question.
The best national snapshot comes from Down Payment Resource’s year-end 2025 index. It counted 2,619 homeownership programs. Of those, 77% were funded, 13% were inactive, 4% had a waitlist and 6% were temporarily suspended. The publisher is an industry data aggregator, so read it as a useful snapshot, not an official ruling.
So roughly three in four were open. That sounds good until you realize one in four was not. Your program could be in either group on the day you sign a contract.
| Status | What it means for you | What to do |
|---|---|---|
| Funded | Money is available to reserve | Confirm the reservation steps |
| Waitlist | Funds are full, a queue exists | Ask about your place and the timing |
| Suspended | Paused, often for budget reasons | Plan a backup before contract |
| Inactive | Closed, with no reopening in sight | Move to another option |
No federal agency keeps this list for you. HUD’s handbook language says FHA does not approve down payment assistance programs that others run, a point stated in HUD’s legacy handbook chapter. FHA sets rules for the mortgage. The assistance provider sets rules for the assistance.
Why Do Programs Run Out of Money?
Programs run out because they draw from fixed budgets. A city, county or state agency gets a pool of money. Buyers reserve it. When the pool is gone, the program stops until the next budget cycle.
A city housing authority makes a clean example. The Chicago Housing Authority closed its assistance program mid-fall after its annual funds were exhausted. That is not a failure. It is how a capped program behaves.
Some programs run on a first-come basis. Some reserve funds when you have a signed contract. Others open in waves. The rule that matters: a program’s name on a list says little. The reservation status says everything.
Public money is only part of the picture. Many programs rely on state, local or private funding rather than federal dollars. That is why a single federal budget headline rarely tells you whether the assistance you want is open.
What Types of Assistance Exist?
Assistance comes in four shapes, and each one behaves differently after closing. Across the wholesale programs Lendmire places files with, the options below are the ones that pair with a government-backed first mortgage. Each is subject to program guidelines and full underwriting.
| Shape | Size (share of price or value) | After closing |
|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay |
| Forgivable second | 3.5% | Forgiven after 36 or 60 on-time payments |
| Repayable second | 3.5% or 5% | Monthly payment, balloon in year 10 |
| Refinance-cost second | 1% to 3.5% of balance | Same terms as repayable second |
Here is how each one works in plain words.
The grant. It is 2% or 3.5% of the purchase price, applied toward the FHA minimum investment. It is released at closing. There is no lien, no payment and no interest. The credit floor is 620. An HUD-approved homebuyer education course is required, and the course cost is credited back at closing. It pairs with FHA first mortgages only, and it is not offered in Washington.
The forgivable second. It is 3.5% of the lesser of the price or the appraised value. It carries no interest and no monthly payment. After 36 or 60 on-time first-mortgage payments with no 90-day delinquency, the balance is forgiven. The credit floor is 640. It pairs with FHA, USDA and HUD-184 first mortgages, for one- and two-unit homes.
The repayable second. It is 3.5% or 5% of the lesser of the price or value. At 5%, it also covers closing costs and prepaid items: the 3.5% minimum investment plus 1.5% toward closing costs. This is a real loan. It has interest, a monthly payment, a 30-year amortization and a balloon due in year 10. The credit floor is 660. Manual underwriting is not allowed, and a first mortgage on a high-balance FHA loan is permitted.
The refinance-cost second. It is 1% to 3.5% of the lesser of your current balance or appraised value. It helps with the closing costs of an FHA refinance, with combined leverage up to 104%. The credit floor is 660. It cannot be used on a streamline refinance or to pay off an existing assistance loan. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Those four shapes match what public agencies publish. The FDIC’s guide to state housing finance agency programs describes the same range: forgivable grants, interest-free deferred “soft seconds” and fully amortizing second loans.
Where Down Payment Assistance Fits in the Buying Process
Your first step is choosing the first mortgage, because it sets the underwriting rules. Everything else follows. Learn more about down payment assistance programs that pair with FHA, USDA and HUD-184 loans, then work the sequence below.
1. Get a preapproval that includes assistance. Tell your loan officer you want an assistance option. Credit score, units and property type decide which shape fits.
2. Confirm the funds are open. Ask for a written confirmation of availability before you make an offer.
3. Reserve the assistance. Reservation timing depends on the program. Some require a signed contract first.
4. Finish the paperwork. The grant needs your homebuyer education certificate. The seconds follow an automated underwriting finding.
5. Close. Assistance funds are applied at closing. A second lien is recorded. A grant is not.
A buyer with thin savings should line up a backup before writing an offer. That is the practical answer to a program that might pause.
FHA Is the Foundation Under the Grant
The assistance sits on top of the first mortgage, so know the FHA basics. FHA requires a minimum investment of 3.5% of the lesser of price or appraised value, with a representative credit score of 580 or higher. Scores from 500 to 579 call for 10%. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
That is why a 3.5% grant or second can cover the whole minimum. FHA first-lien leverage tops out at 96.5%.
FHA also charges mortgage insurance. There is an upfront premium of 1.75% of the base loan, which you can finance into the loan. Annual premiums depend on your loan size and leverage. FHA one-unit loan limits currently run from $541,287 to $1,249,125 depending on the county. The assistance options have their own higher credit floors, so the program floor, not the FHA floor, usually controls.
USDA and HUD-184 first mortgages have different rules. USDA is for eligible rural areas and carries its own income limits. HUD-184 is a loan guarantee for eligible Native American borrowers. HUD says that program does not itself provide down payment assistance or grants, so any assistance there comes from a tribe or another source. Ask the tribe what it offers and what funds remain.
Do You Have to Be a First-Time Buyer?
No. None of the four options requires a first-time buyer. Repeat buyers and move-up buyers qualify, subject to program guidelines.
Many public programs do require a first-time buyer and carry an income cap. An older Urban Institute analysis found that most programs had both, which is one reason people assume the rule is universal. It is not.
Income limits depend on the shape. The second-lien options carry no income limit beyond USDA’s own limit on a USDA first mortgage. The grant has one test with several ways around it. You meet the grant’s eligibility if you satisfy any one of these:
- Household income is at or below 140% of area median income.
- You are a first responder, current, former or entering service.
- You are an educator.
- You work in medical care, such as a nurse, doctor, phlebotomist or hospital worker.
- You are a civil servant at the federal, state or local level.
- You are military personnel, current, retired or volunteer.
- You are a first-time buyer, meaning no ownership interest in a residential property in the past three years.
- You are buying in an underserved census tract.
The first-time definition is just one door among several.
Every option is for an owner-occupied primary residence. That means no second homes, no vacation homes and no rentals. If you are thinking about a rental, assistance is not the tool.
What Each Option Means for Your Monthly Budget
The grant adds no payment and no debt. The forgivable second adds no monthly payment either, though it is a lien on the home until forgiveness. The repayable second adds a monthly payment, and that payment counts when the lender figures your debt load.
HUD’s handbook treats government-held second liens the same way: payments on both liens count toward your ability to repay. A repayable second can tighten your budget, so look at the full monthly picture before you choose the larger percentage.
Think about the year-10 balloon too. You would owe the remaining balance then. Many buyers plan to sell or refinance before that date. If you plan to stay, plan for the balloon.
A second lien also lowers your equity cushion early on. It must be paid off or handled in any later refinance, and some refinance programs will not roll an assistance second into a new loan. Ask your loan officer how it would be treated before you commit.
The Combination Rule: One Program at a Time
Do not plan to stack assistance. No option can be combined with another down payment assistance program. A mortgage credit certificate is also not permitted with the second-lien options.
The grant also cannot pair with several FHA variants, including FHA High Balance, FHA $100 Down, FHA 203(h), the Good Neighbor Next Door program and FHA One-Time Close.
Gifts are a different matter. Family gifts are common, and they are not assistance programs. HUD-reported figures cited by HousingWire show that 42.31% of FHA purchase borrowers used some form of down payment help in fiscal year 2025, and more than half of that came from family gifts rather than government programs. Ask your lender how a gift would interact with the option you pick, since sources and paper trails matter.
What If Your Program Is Closed or on a Waitlist?
Picture a renter who finds a program, gets a preapproval and then learns the program paused last week. This happens often. Here is how to respond.
- Ask about the waitlist. Find out how the queue works and what happens when funds return.
- Check the other shapes. A grant might be closed while a forgivable or repayable second is open, or the reverse.
- Look at your timeline. If your contract allows it, time your closing around a reopening. Do not rely on a reopening date nobody can promise.
- Use a gift if you have one. FHA allows the minimum investment to come from an acceptable gift.
- Know your budget without assistance. If you can afford the home only with assistance, wait for confirmed funding.
The strongest play is a plan B on the day you sign the contract, not the day you learn funding stopped. A decision that hinges on one program’s budget is a fragile decision.
Common Mistakes to Avoid
- Trusting an old list. Any list of open programs goes stale. Treat it as a starting point.
- Assuming the assistance is a gift. The grant has nothing to repay. The seconds are loans, and one of them has a payment and a balloon.
- Skipping the education course. The grant requires a HUD-approved homebuyer education course.
- Missing the property rules. The grant covers one- to four-unit primary residences. The seconds cover single-family, condominium and PUD properties, with unique property types excluded.
- Ignoring the lender’s role. Some programs work only through participating lenders. A broker who works with several wholesale lenders can check which ones are in.
- Forgetting repairs. On the second-lien options, escrow holdbacks cover minor non-structural repairs up to $5,000. The escrow is 150% of the estimate, and the work must be finished within 90 days.
Key Terms Defined
Down payment assistance: Money or a loan that helps cover your down payment or closing costs on a primary residence.
Minimum required investment: The smallest amount you must put in on an FHA loan, 3.5% of the lesser of price or appraised value for stronger credit scores.
Second lien: A second loan recorded behind your main mortgage. It is repaid after the first lien if the home is sold.
Forgivable second: A second lien with no interest or payment that is erased after a set number of on-time payments on your main mortgage.
Balloon payment: A large lump sum due at the end of a set period, in this case year 10 on the repayable second.
Area median income: The midpoint household income for your area. The grant option uses an income test set at 140% of it, unless a category applies.
Wholesale lender: A lender that works through brokers instead of selling directly to the public.
Frequently Asked Questions
Is down payment assistance still available?
Yes, though not every program. The year-end industry index counted 2,619 programs, and about three in four were funded. The rest were waitlisted, suspended or inactive. Availability changes by program and over time, so confirm the status of the specific one you want.
Why did the program I wanted close?
Most likely its fixed budget ran out. Programs draw from capped pools, and when reservations use the money, the program pauses or closes until new funding arrives. A closed program is not a sign that your credit or file did anything wrong.
Do I need to be a first-time buyer?
No. None of the options Lendmire arranges requires you to be a first-time buyer, and repeat buyers qualify. The grant has an income test of 140% of area median income unless you fall into a listed category, and being a first-time buyer is not required to meet that test. Eligibility is subject to program guidelines and underwriting.
Can I use assistance on a rental or second home?
No. These options are for an owner-occupied primary residence only. They do not apply to vacation homes, second homes or rental property.
Which option is the least costly after closing?
The grant, because it has nothing to repay. The forgivable second adds no monthly payment and is forgiven after 36 or 60 on-time payments. The repayable second is a loan with a payment and a balloon in year 10. Credit scores, units and the first mortgage decide which options you can actually use.
Next Step
If you are buying a primary home and want to see whether a down payment assistance option fits your file, Lendmire can help you compare the grant, forgivable and repayable structures alongside an FHA, USDA or HUD-184 first mortgage. Lendmire is a mortgage broker that arranges these loans through wholesale lenders, subject to program guidelines, full underwriting and credit approval. Funding status matters more than the program name, so ask for a current check before you rely on any option.
Investors who want the broader program framework can review how DSCR loans work.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging government-backed purchase loans and the down payment assistance options that sit on top of them through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Down Payment Resource: year-end index of homeownership programs
2. HUD Handbook 4155.1, Chapter 5, Section B (superseded)
3. Chicago Housing Authority: down payment assistance
4. FDIC: state housing finance agency down payment guide
6. HousingWire
This article is part of Lendmire’s down payment assistance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Should You Take Down Payment Assistance If You Plan to Refinance? · Down Payment Assistance vs Gift Funds From Family · Down Payment Assistance Programs for High Earners With Student Debt
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.