Down Payment Assistance 2026
First-Time Home Buyer Programs: DPA, HomeReady & State Grants
A 3.5% down payment on a $350,000 home is $12,250. Dozens of programmes can cover that entirely -- and some are grants that never need to be repaid. This guide covers Chenoa Fund, HomeReady income limits for 25 metros, and 15 state DPA programmes with 2026 figures.
3.5%
FHA minimum down
580+ FICO
3%
HomeReady minimum
97% LTV conventional
5%
Max DPA grant (some states)
of loan amount
50 states
Chenoa available
CBC Mortgage Agency
Chenoa Fund: Nationwide DPA for FHA Loans
The Chenoa Fund, administered by CBC Mortgage Agency (a federally chartered tribal HFA), is the largest nationwide down payment assistance programme in the United States as of 2026. It operates in all 50 states and pairs exclusively with FHA first mortgages. There is no HUD-approved DPA that works this broadly with conventional loans.
Chenoa offers two tracks: a repayable second mortgage at 0% interest (no income limit) and a forgivable second mortgage that is cancelled after 36 months of on-time payments (income limit: 135% of Area Median Income). Both cover the full 3.5% FHA down payment as a second lien, meaning the borrower can close with zero out-of-pocket down payment when seller concessions cover closing costs.
Repayable 2nd Mortgage
- 0% interest rate on second lien
- No income limit
- 620+ FICO required
- Repaid when home sells or refi occurs
- Available in all 50 states
- FHA first mortgage required
Forgivable 2nd Mortgage
- Forgiven after 36 on-time payments
- Income limit: 135% AMI
- 620+ FICO required
- Effective grant if borrower stays 3 years
- Available in most states
- FHA first mortgage required
HomeReady 2026 Income Limits by Metro
Fannie Mae HomeReady allows 3% down conventional loans for borrowers at or below 80% of Area Median Income. Unlike FHA, HomeReady does not charge MIP for life -- PMI cancels at 80% LTV. If you qualify on income, HomeReady is almost always cheaper than FHA over a 7+ year hold.
Income is measured by the borrower(s) on the loan only, not all household members. The limit is based on the census tract of the property, not the borrower's home address. Some high-cost tracts have no income limit at all. Check Fannie Mae's AMI Lookup Tool at fanniemae.com for precise figures. The table below shows 80% AMI limits for the 25 largest metros as of 2026.
| Metro Area | 80% AMI Income Limit |
|---|---|
| New York-Newark, NY | $95,600 |
| Los Angeles-Long Beach, CA | $86,400 |
| Chicago-Naperville, IL | $83,200 |
| Dallas-Fort Worth, TX | $84,400 |
| Houston, TX | $79,200 |
| Washington, DC-MD-VA | $107,200 |
| Miami-Fort Lauderdale, FL | $78,400 |
| Philadelphia, PA | $82,400 |
| Atlanta, GA | $83,280 |
| Phoenix, AZ | $75,200 |
| Boston, MA | $105,600 |
| Riverside-San Bernardino, CA | $75,200 |
| Seattle, WA | $100,800 |
| Minneapolis-St. Paul, MN | $89,600 |
| San Diego, CA | $96,640 |
| Tampa-St. Petersburg, FL | $72,800 |
| Denver, CO | $88,000 |
| St. Louis, MO | $76,400 |
| Baltimore, MD | $92,800 |
| Charlotte, NC | $78,880 |
| Orlando, FL | $72,800 |
| San Antonio, TX | $72,000 |
| Portland, OR | $90,560 |
| Sacramento, CA | $82,400 |
| Austin, TX | $92,000 |
Source: Fannie Mae AMI Lookup 2026. Limits updated annually. Verify at fanniemae.com/homeready before underwriting.
HomeReady vs FHA: Monthly Cost Comparison (Seattle, $420,000 home, 3% down)
FHA 3.5% Down
Loan: $426,150 (inc. UFMIP)
P+I: $2,827/mo @ 6.85%
Annual MIP: $195/mo
Total PITIA: ~$3,400/mo
MIP never cancels (LTV >90%)
HomeReady 3% Down
Loan: $407,400
P+I: $2,746/mo @ 6.75%
PMI: ~$170/mo (cancels yr 9)
Total PITIA: ~$3,284/mo
Saves $116/mo; PMI cancels yr 9
Home Possible: Freddie Mac's 3% Alternative
Freddie Mac Home Possible mirrors HomeReady in most respects: 3% minimum down, 80% AMI income limit, reduced PMI rates, and homebuyer education required. The key differences are in eligible property types and the treatment of non-occupant co-borrowers.
Home Possible Advantages
- No minimum FICO (non-traditional credit OK)
- Non-occupant co-borrowers allowed (95.01-97% LTV)
- Manufactured homes eligible
- 1-4 unit properties
- Sweat equity accepted as down payment
HomeReady Advantages
- Non-borrower household income considered
- Boarder income (30% of qualifying)
- More DPA compatibility
- ADU rental income on 1-unit
- Expanded approval flexibility
Both programmes require completion of a HUD-approved homebuyer education course before closing. Framework (frameworkhomeownership.org) charges $75. MGIC or Fannie Mae offer free online equivalents. The course covers budgeting, loan types, and maintenance -- worth taking even without the programme requirement.
15 State Down Payment Assistance Programs (2026)
Every state has a Housing Finance Agency (HFA) with at least one DPA programme. The 15 programmes below are the most widely used in 2026. Income and purchase price limits vary by county -- the figures shown are representative metro-area caps. Always verify directly with the HFA before advising a borrower.
| State | Program | Type | Max Amount |
|---|---|---|---|
| California | CalHFA MyHome | Deferred 2nd | 3.5% of purchase price |
| Texas | TSAHC Home Sweet Texas | Grant (no repay) | 5% of loan amount |
| New York | SONYMA Achieving the Dream | 0% deferred 2nd | $22,000 |
| Florida | FL HFA Preferred Grant | Grant | 3% of loan amount |
| Virginia | VHDA Down Payment Assistance Grant | Grant (no repay) | 2.5% of purchase price |
| Massachusetts | MassHousing Down Payment Assistance | Deferred 0% 2nd | $30,000 (Boston $50,000) |
| Pennsylvania | PHFA Keystone Advantage | Deferred 0% 2nd | 4% of purchase price (max $6,000) |
| Ohio | OHFA Grants for Grads | Forgivable 2nd (5 yr) | 2.5% or 5% of purchase price |
| Illinois | IHDA Access Repayable | Repayable 0% 2nd (10 yr) | $10,000 |
| North Carolina | NCHFA NC Home Advantage | Deferred (forgiven yr 11+) | 3% or 5% of loan amount |
| Georgia | Georgia Dream | 0% deferred 2nd | $10,000 ($12,500 targeted) |
| Colorado | CHFA SmartStep Plus | Grant | 3% of first loan |
| Michigan | MSHDA MI Home Loan | 0% deferred 2nd | $10,000 |
| Washington | WSHFC Home Advantage DPA | 0% deferred 2nd | 4% of first loan |
| Arizona | ADOH HOME Plus | Grant (no repay) | Up to 5% of loan amount |
Figures current April 2026. Income limits and amounts change annually. Verify with state HFA before loan application.
Non-Profit and Local Programs
Beyond state HFAs, hundreds of county and city DPA programmes exist -- particularly in major metros. The National Council of State Housing Agencies (ncsha.org) maintains a searchable directory. HUD's housing counsellor locator (hud.gov/housingcounseling) can connect borrowers with local experts who know every available programme in their area.
VA and USDA: Zero-Down Federal Alternatives
Before stacking DPA programmes, eligible borrowers should check VA and USDA first. Both offer genuine zero-down loans with no PMI or MIP equivalents in many cases.
VA Loan
- Who qualifies: Veterans, active duty (90 days), National Guard (6 years), surviving spouses
- Down payment: 0% with full entitlement
- Mortgage insurance: None (funding fee 1.25-3.3% UFMIP, waived for disabled vets)
- FICO: VA sets no minimum; lenders typically require 580-620
- Loan limits: No cap with full entitlement; conforming limit applies with reduced entitlement
- Verdict: Best loan product available if you qualify. Do not use FHA when VA is an option.
USDA Rural Development
- Who qualifies: Moderate-income buyers in eligible rural/suburban areas
- Down payment: 0% (can finance guarantee fee into loan)
- Fees: 1% upfront + 0.35% annual guarantee fee (cheaper than FHA MIP)
- FICO: 640+ for automated underwriting; manual down to 580
- Income limit: 115% of median household income ($110,650 for 1-4 person households in most areas)
- Verdict: Best option for lower-income buyers outside major cities. Annual fee is significantly lower than FHA MIP.
Stacking DPA: FHA + Chenoa vs 3% Conventional
The core question for first-time buyers with limited savings is whether to use FHA with DPA (effectively zero down) or qualify for HomeReady at 3% and avoid MIP-for-life. The worked example below compares both paths on a $320,000 home in Columbus, Ohio (OHFA eligible, 680 FICO, $82,000 household income -- within HomeReady 80% AMI limit of $89,600).
| Item | FHA + Chenoa Forgivable | HomeReady 3% + OHFA Grant |
|---|---|---|
| Purchase price | $320,000 | $320,000 |
| Down payment | $0 (Chenoa covers 3.5%) | $9,600 (3%) less OHFA grant |
| OHFA grant (5% of loan) | N/A | $15,500 (grant covers DP + more) |
| Cash to close | ~$7,800 (closing costs only) | ~$2,000 after OHFA grant |
| Loan amount | $330,240 (inc. 1.75% UFMIP) | $310,400 |
| Chenoa 2nd lien | $11,200 (forgivable 36 mo) | N/A |
| Monthly P+I (6.80% / 6.70%) | $2,190 | $2,010 |
| Monthly MIP/PMI | $152/mo MIP (never cancels) | $136/mo PMI (cancels yr 9) |
| Total PITI (est.) | $2,720/mo | $2,524/mo |
| Yr 1-3 if sell/refi | Chenoa 2nd ($11,200) due | No lien issue |
| 30-year total interest+MIP/PMI | ~$978,000 | ~$896,000 |
| Verdict | Use if income > 135% AMI or no savings | Preferred if income eligible |
Decision rule for income-eligible borrowers
If the borrower earns at or below 80% AMI, has a 620+ FICO, and plans to stay 7+ years, HomeReady or Home Possible with a state grant beats FHA + Chenoa in every scenario modelled above. The $196/mo monthly saving compounds to $16,464 over 7 years before accounting for the earlier PMI cancellation. Only use FHA + Chenoa when income exceeds 80% AMI (disqualifying HomeReady), savings are truly zero, or FICO is below 620.
How DPA Affects Your Loan Approval
Stacking DPA with a first mortgage adds complexity to underwriting. Both lenders (first and second mortgage) must approve the combined scenario. Key underwriting considerations:
Combined DTI
The second mortgage payment (if repayable) counts toward your DTI ratio. FHA allows up to 56.9% DTI with compensating factors (HUD 4000.1 II.A.5.d). A $200/mo second mortgage payment can materially affect approval. Forgivable seconds with no payment often have zero DTI impact.
Rate Premium
Many HFA first mortgages carry a rate 0.125-0.375% above market in exchange for the DPA benefit. Run the total cost comparison including this premium. Sometimes it is cheaper to take market rate + save 3% yourself than accept a below-market DPA with an above-market rate.
HFA-Approved Lenders Only
State HFA programmes require using a participating lender. Not every bank or credit union is approved. The HFA website lists participating lenders -- typically 20-50 in each state. You cannot use the programme with a non-participating lender even if they offer better terms.
Recapture Tax
Some HFA bonds carry a federal recapture tax if you sell within 9 years and your income rises substantially. The tax is limited to 50% of gain and only applies if gain exceeds the DPA received. In practice, most borrowers owe nothing -- but ask the HFA specifically and review IRS Form 8828.
Frequently Asked Questions
Can I use down payment assistance if I have a co-signer who owns property?
Does using DPA hurt my FHA loan approval?
What FICO score do I need for most DPA programmes?
Can I use DPA for a multi-unit property?
Is there income too high for all DPA programmes?
Related Guides