Home Buying Scholarships

Home Buying Scholarships ~ Everything You Need to Know About DPA’s

Buying a home is one of the biggest financial decisions many of us make—and one of the biggest hurdles is assembling enough for the down payment and closing costs. That’s where Down Payment Assistance (DPA) Programs come in: they’re like “scholarships” for home buying. There’s money out there, but many buyers don’t know how or where to find it.

Here are some things most people misunderstand about DPA, what the benefits are, and what to watch out for. Plus, I’ll share a resource and how I can help guide you through it.

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Misconceptions (Myths) vs. Facts

Myth	Reality
Only low‐income / very poor people qualify	Not always. Some programs are for low‐ or moderate‐income buyers; others allow higher incomes, depending on area and housing costs. Quicken Loans+2Urban Institute+2
Only first‐time buyers can use them	It depends on the program. Some require “first‐time buyer” status (often defined as not owning a home in the last 3 years), but many programs don’t. HSH+2Sovereign Realty & Management+2
Assistance is scarce / programs are out of funds	There are many programs—but availability can be limited, budgets get exhausted, or there might be waiting periods. Urban Institute+1
DPA means free money only	Some programs are grants (free money), some are forgivable loans, some are second mortgages (which may have to be paid back under certain conditions). Terms vary. Urban Institute+2Novum Home Loans+2

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What Are the Benefits

Here’s what DPA can do for you:

1. Reduce Upfront Cash Needed – You may be able to buy sooner because you don’t have to accumulate the full down payment on your own. NCLUSIVE FINANCIAL CORP.+2HSH+2
2. Help with Closing Costs – Some programs cover not just the down payment but part or all of closing costs or prepaid items. HSH+1
3. Forgivable Loans or Grants – If you stay in the home for a required period or meet other conditions, you may not have to repay the assistance. Urban Institute+2HSH+2
4. More Buying Power – With help, you may be able to afford a more expensive home or better neighborhood than without it. Urban Institute+1
5. Build Equity Sooner – Owning rather than renting builds equity and can offer stability.

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What a Savvy Buyer Needs to Know (The Fine Print & Possible Drawbacks)

While DPAs are powerful tools, they aren’t perfect for everyone. Here are the key things to watch for, including additional costs, restrictions, and risks.

Issue	Details to Watch Out For
Eligibility Requirements	Many programs have income caps, purchase price caps, credit score minimums, and may require first‐time buyer status. Make sure you meet those before assuming you qualify. HSH+2NCLUSIVE FINANCIAL CORP.+2
Property Home Type, Location, Price Restrictions	Some DPAs will only apply to specified areas, primary residences (not investment property or vacation homes), or types of homes. There may be caps on how expensive the home can be for your area. HSH+1
Repayment / Forgiveness Conditions	Even if it’s a forgivable loan, there is often a required period of occupancy. If you move, sell, or refinance before that period, you might owe part or all of the loan. Urban Institute+1
Extra Loan Cost or Interest	If the assistance is structured as a second mortgage or deferred loan, it could have an interest rate (sometimes low, sometimes subsidized) or require repayment. Some programs may increase overall loan costs over time. Novum Home Loans+2HSH+2
Private Mortgage Insurance (PMI)	Even with assistance, if your down payment is less than 20% for a conventional loan, you may still have to pay PMI until you reach enough equity. DPA may reduce PMI or help avoid it in some cases (if it’s enough), but not always. The Muse+1
Limited Lenders / Program Compatibility	Not all lenders accept all programs. Some lenders are not approved or versed in certain DPAs. This could limit your choice of lender, rate, or terms. Redfin+1
Longer Process / More Paperwork / Timing	Because there’s often a second loan, or oversight from a state/local agency, or required education classes, etc., the closing might be delayed or more complex. NCLUSIVE FINANCIAL CORP.+1
Costs & Fees	There could be additional fees (application fees, origination, closing costs, etc.) tied to the assistance program itself. Sometimes the interest rate on the primary mortgage or second mortgage might be slightly higher. Also, see if there are any “silent seconds” or liens you must disclose. Novum Home Loans+1

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How Many Programs Are Out There & What to Use for Research

• There are over 1,600 funded DPA programs in the U.S. as of mid‐2023. Urban Institute
• They’re offered by state agencies, local governments, nonprofit organizations, sometimes lenders. HSH+1
• Median assistance is often in the ballpark of $10,000–$16,000, depending on area, or sometimes expressed as a percentage of home price or loan amount. Urban Institute+1

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What to Do Next / How I Can Help

• You can start exploring programs on your own via this website: DownPaymentResource.com. They map out what programs are available in your area, eligibility, amount of assistance, etc. If you have a specific home you are interested in, you can plug the address in and see how many DPAs are available for that home.
• I can help you figure out which programs you may qualify for, based on your income, credit, home price, location; help you coordinate with lenders who accept those DPAs; help you understand what kind of costs or repayment you’ll be responsible for.

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