One of the biggest myths in homebuying is that you need 20% down. You do not. Many buyers, especially first-time buyers, purchase homes with much less — and some may also qualify for down payment assistance to help with the upfront costs.
Down payment assistance can be a tool to help bridge the gap between what you have saved and what you need to close. But let's be clear: it is not one-size-fits-all, and it is not "free money, no strings attached." Every program has rules.
What Can Down Payment Assistance Help Pay For?
Depending on the program, assistance may be used toward:
- Down payment
- Closing costs
- Prepaid taxes and insurance
- Other eligible loan-related costs
Some programs are structured as grants. Some are forgivable second mortgages. Some are deferred loans. Some are repayable second mortgages. That structure matters. A buyer should understand whether the assistance has to be paid back, when, and what happens if they sell or refinance.
Down Payment Assistance by State
Illinois buyers may have access to programs through IHDA that help with down payment and closing costs. This can be a strong fit for buyers in the Chicago suburbs, Cook County, Will County, Naperville, Aurora, Joliet, Plainfield, Oswego, Yorkville, and surrounding communities.
Indiana buyers may have options through IHCDA, including assistance for qualifying first-time buyers that may be paired with eligible loan types. Buyers should pay close attention to county, income, and purchase price limits.
Tennessee buyers may have access to THDA programs, including Great Choice Home Loan options and related assistance for eligible buyers. The key is understanding whether the program fits your loan type, income, and long-term plan.
Alabama buyers may have access to AHFA programs designed for buyers who can afford a mortgage but need help with down payment or closing costs. Some programs use a second mortgage structure and may require homebuyer education.
Who Usually Qualifies?
Common program requirements may include:
- Income limits
- Purchase price limits
- Minimum credit score
- Approved loan type
- Homebuyer education completion
- Occupancy as a primary residence
- Approved lender participation
- First-time buyer status (depending on program)
The right approach: Match the buyer, property, loan type, and program guidelines together before writing an offer. Googling "free money to buy a house" is not a strategy.
Bottom Line
Down payment assistance can be a game-changer for the right buyer. But it needs to be used strategically. The best question is not "What program gives me the most money?" The best question is: What program gets me into the right loan, with a payment I can live with, and terms I understand?
That is where the real planning happens.
Let's review your down payment assistance options.
Looking for down payment assistance in Illinois, Indiana, Tennessee, or Alabama? Let's review your options before you assume you need a giant pile of cash to buy a home.
Educational Disclaimer: Program availability, income limits, purchase price limits, and guidelines are subject to change. Contact Kim Dobyns directly for a personalized review. Kim Dobyns, NMLS #204859 · Union Home Mortgage Corp., NMLS #2229 · Licensed in IL · IN · TN · AL · Equal Housing Lender.