Down Payment Assistance Checklist

Most state HFA and city DPA programs cap household income at 80% to 140% of HUD area median income (AMI) for the MSA, with stricter limits for grant-style assistance. Pull the current AMI table from the program's website (HUD AMI tables update annually around April) and confirm whether the program counts gross income, qualifying income, or all household members regardless of borrower status.

Most DPA programs require a 640 minimum middle FICO; some go to 620 with manual underwriting, and CalHFA/MyHome and similar set their own overlays above the FHA floor. Use the lender's tri-merge pull, not a soft consumer score — Credit Karma scores routinely run 30-50 points high.

HUD definition: has not owned a principal residence in the prior 3 years. Confirm with three years of tax transcripts (1098 mortgage interest is the giveaway). Displaced homemakers and single parents who only owned with a former spouse may qualify under exception clauses — read the specific program rules, not the generic HUD definition.

DPA programs limit purchase price (often tied to FHA loan limits or program-specific caps), occupancy type (owner-occupied primary only — no investment, no second home), and sometimes property type (SFR and condo only, no manufactured). Some programs further restrict to target census tracts. Confirm the address falls inside any geographic boundary before writing the offer.

Start with the state Housing Finance Agency (e.g., CalHFA, TSAHC/TDHCA, FHA-Florida Hometown Heroes, NYS SONYMA), then the city or county HOME/CDBG programs. Down Payment Resource is the standard search tool brokerages use to surface available programs by ZIP code.

NeighborWorks affiliates, Habitat for Humanity homebuyer programs, and FHLB grants (Affordable Housing Program, Workforce Initiative Subsidy for Homeownership) layer on top of HFA loans. Lender CRA grants — Chase Homebuyer Grant, BoA Down Payment Grant, Wells Community Homeownership — are tied to specific census tracts and require the buyer to use that lender.

Hospitals, universities, and large employers often run Employer Assisted Housing (EAH) benefits — forgivable second mortgages tied to continued employment. Teachers, first responders, and healthcare workers should specifically be screened for Good Neighbor Next Door and state hero programs.

Pick based on assistance amount, repayment structure (forgivable, deferred, amortizing second), program fees, and whether the buyer's selected lender is an approved program participant. Some programs require attendance at the program-specific homebuyer education course before lock — schedule accordingly.

Two years of W-2s and tax transcripts, 30 days of paystubs, two months of bank statements (all pages, even blanks), and gift letter if any down payment is gifted. Self-employed buyers add two years of personal and business returns plus a YTD P&L. DPA underwriters often re-verify income within 10 days of closing — keep documents fresh.

Many HFA programs require submission through the lender's portal (e.g., CalHFA's MAS, TSAHC's loanpipeline) rather than a buyer-direct form. The buyer's agent role is verifying the lender is on the program's approved-lender list and confirming the LO has actually processed a DPA loan before — not all LOs have.

Most state HFA programs use a reservation system — funds are reserved for a specific borrower for 60-90 days. Reservation must happen before lock; expiration without closing forfeits the reservation. Track the reservation expiration date alongside the financing-contingency deadline.

Approval is conditional on the first-mortgage clear-to-close; treat it as a separate milestone, not bundled with the underlying loan. If denied, the buyer needs either an alternate program (start over on reservation) or a revised offer with seller credits — flag immediately so the financing contingency can be extended.

Most DPA programs require an 8-hour HUD-approved course; Framework, eHome America, and MGIC Readynest are commonly accepted online options. Some HFAs require their own branded curriculum — verify before the buyer starts. Certificate is valid 12-24 months depending on program.

Pivot to a backup program (often the lender CRA grant or a non-HFA city program), increase seller-paid closing-cost concession via amendment, or restructure the loan (FHA with gift instead of conventional with DPA second). Notify the title company of any change to source-of-funds — last-minute funding source changes are a wire-fraud red flag and require fresh verification.

The DPA second appears on the Closing Disclosure as a separate loan; review both CDs together for fee accuracy and confirm the title company has the program's funding authorization in hand. TRID's 3-business-day rule applies to the first mortgage CD — any change to the DPA fees flows back into the first CD and can re-trigger the waiting period.

DPA funds typically wire from the program administrator to the title company 1-2 business days before closing. Confirm receipt with the escrow officer by phone using a known number — never rely on emailed confirmation alone. Funds not received = closing rescheduled, reservation potentially forfeited.

Forgivable seconds typically include a recapture provision — pro-rata repayment if the buyer sells, refinances, or stops occupying as primary residence within 5-10 years. Walk the buyer through the recapture terms at signing; surprise recapture at refinance is the most common DPA complaint.

Include the recorded second mortgage, the recapture/forgiveness schedule with key dates calendared, the program contact for future questions (refinance, hardship, payoff), and the homebuyer education certificate for the buyer's records.