Saving enough money for a down payment is one of the biggest challenges for many home buyers. Down payment assistance programs exist to help with this exact problem. They can come as a grant, a loan, or a deferred payment, depending on the program.
This guide explains what down payment assistance actually is, how these programs work, who typically qualifies, and specific programs available nationally, in California, and in Montana. For a full breakdown of loan types such as FHA, VA, USDA, and conventional loans, see our guide on the best first-time home buyer loans.
What Counts as Down Payment Assistance?
Down payment assistance is money or credit that helps a buyer cover the down payment, the closing costs, or both. It comes in several different forms.
- Grants. Money that does not need to be repaid.
- Forgivable loans. A loan that is canceled after the borrower meets certain conditions, such as staying in the home for a set number of years or making a set number of on-time payments.
- Deferred payment loans. A loan with no monthly payment, due only when the home is sold, refinanced, or the first loan is paid off.
- Repayable second mortgages. A loan that requires its own monthly payment, in addition to the main mortgage payment.
- Matched savings programs. A program that matches money a buyer saves toward a down payment, up to a set amount.
- Mortgage Credit Certificates. A federal tax credit, not cash, that reduces the amount of tax owed each year.
First-time home buyer grants are one of the more commonly searched terms for this type of assistance. They fall under the grant category above, money that does not need to be paid back.
How These Programs Actually Work
Most down payment assistance comes in the form of a second loan that sits behind your main mortgage. This is called a second lien position. If the home is later sold, the main mortgage is paid off first, and the assistance program is paid back after, if it requires repayment at all.
Lenders also look at the combined loan to value ratio, meaning the total of your main loan and the assistance loan compared to the value of the home. Many programs limit how high this combined amount can go.
Most assistance programs also require a specific type of first mortgage, such as an FHA loan or a loan through a particular state housing agency. For a full explanation of loan types such as FHA, VA, USDA, and conventional loans, see our guide on the best first-time home buyer loans.
Who Typically Qualifies?
Eligibility rules vary by program, but a few requirements appear often.
- Income limits, usually based on the median income for your area
- A minimum credit score, though the exact number depends on the program
- A completed homebuyer education course
- First-time buyer status, though some programs, such as the Chenoa Fund, allow repeat buyers as well
- A requirement that you live in the home as your main residence, rather than renting it out or using it as a second home
The section further below compares four specific programs side by side, so you can see how these general rules apply in practice.
A National Option, the Chenoa Fund
The Chenoa Fund is a down payment assistance program available nationwide, provided by CBC Mortgage Agency. It pairs with FHA loans and provides either 3.5 percent or 5 percent of the purchase price as a second mortgage.
There are two versions of this assistance. The repayable option requires its own monthly payment, at a set interest rate. The forgivable option carries no interest and is fully forgiven after 36 consecutive on-time payments on your main mortgage.
The minimum credit score for the Chenoa Fund is 600, and there is no income limit. It is open to both first-time and repeat buyers, which is different from many state programs.
California Buyers, the CalHFA MyHome Program
California buyers can look into the MyHome Assistance Program through the California Housing Finance Agency, known as CalHFA.
This program is a deferred payment second loan, not a grant, with a zero percent simple interest rate. It provides up to 3.5 percent of the sales price or appraised value when paired with an FHA first mortgage, or up to 3 percent when paired with a conventional, USDA, or VA loan. Repayment is due when you sell the home, refinance, or pay off the first loan.
To qualify, you need to be a first-time home buyer, complete a homebuyer education course, and meet income limits that CalHFA sets by county. The program must be combined with a CalHFA first mortgage.
For buyers in Bakersfield and the surrounding Kern County area, this is one of the more accessible state programs to ask a lender about directly.
Montana Buyers, Montana Board of Housing Programs
Montana offers two down payment assistance programs through the Montana Board of Housing.
Bond Advantage provides up to 5 percent of the sales price, capped at $15,000. It is structured as its own second mortgage, with a monthly payment spread over 15 years.
MBOH Plus also provides up to 5 percent of the sales price, capped at $15,000, but works differently. It carries a zero percent interest rate and no monthly payment, since repayment is deferred until the home is sold or the first loan is refinanced. This version has income limits, $80,000 for one to two people, and $90,000 for three or more people.
Both programs require a Montana Board of Housing first mortgage, a minimum credit score of 620, a completed homebuyer education course, and a minimum $1,000 contribution from the buyer, which can come as a gift.
For buyers in the Flathead Valley, these programs are worth asking about early, since homes in the area can receive multiple offers during peak seasons.
Eligibility at a Glance, Comparing the Programs
The section above on general eligibility covers the broad idea. This table shows how the specific programs described above actually compare to one another.
| Program | Minimum credit score | Income limit | First-time buyer required | Homebuyer education required |
|---|---|---|---|---|
| Chenoa Fund | 600 | None | No, open to repeat buyers | Varies by lender |
| CalHFA MyHome | Follows the paired CalHFA first mortgage | Yes, set by county | Yes | Yes |
| Montana Bond Advantage | 620 | None stated | Follows Montana Board of Housing first mortgage rules | Yes |
| Montana MBOH Plus | 620, maximum 45 percent debt to income | Yes, $80,000 for one to two people, $90,000 for three or more | Follows Montana Board of Housing first mortgage rules | Yes |
As shown in the table, the Chenoa Fund has the fewest restrictions, while the Montana and California programs require more, including a first mortgage from the same agency and a completed education course.
How to Find a Program in Your Area
Beyond the programs named above, many states, counties, and even some cities offer their own down payment assistance. A few ways to find what is available where you live.
- Check your state’s housing finance agency website directly
- Speak with a HUD-approved housing counselor, who can review your situation and point you toward programs you may qualify for
- Ask your lender or real estate agent which programs they have direct experience with, since not every lender works with every program
Programs and funding levels can change from year to year, so it helps to confirm current details before you rely on a specific number.
Common Questions About Down Payment Assistance
Do I have to pay down payment assistance back?
It depends on the program. Grants generally do not require repayment. Forgivable loans are canceled after you meet certain conditions. Deferred loans and repayable second mortgages do require repayment, either later or through regular monthly payments.
Can I combine more than one assistance program?
Sometimes, though it depends on the rules of each program and the combined loan to value limit set by your first mortgage. Ask your lender directly whether combining programs is allowed in your situation.
Will using down payment assistance make my offer less competitive?
Not necessarily. Many sellers focus on the strength of your financing and your ability to close, not on how your down payment is funded. A knowledgeable agent can help you present your offer clearly.
Is there a $25,000 grant for first-time home buyers?
Not currently. This question usually comes from the Downpayment Toward Equity Act, a bill that was introduced in 2021 and reintroduced since then. As of early 2026, it has not passed and is not law, so this money is not available to apply for. Buyers looking for real, current help should look at the programs listed above instead.
Can I buy a house with no money down?
In some cases, yes. Loan types such as VA and USDA loans allow for a zero percent down payment for eligible buyers, which our guide on first-time home buyer loans explains in more detail. Down payment assistance can then help cover remaining closing costs.
Ready to Explore Your Options? Talk to an Advisor
Down payment assistance programs change over time, and the right option depends on your income, your credit, and where you plan to buy.
Contact the Lockhart Real Estate Advisors team to talk through which programs might fit your situation, whether you are buying in Bakersfield, the Flathead Valley, or elsewhere.