A first-time buyer in Texas puts 6% down on a $340,000 house. That is $20,400 out of pocket before closing costs. A state housing finance agency program could hand that buyer up to $18,000 in forgivable loan money, cutting the cash needed at closing to a fraction of what most people assume. The program has been running for years. The buyer has never heard of it.
Multiply that scenario across every state, and you start to understand one of the strangest inefficiencies in American housing: billions of dollars set aside specifically to help people buy homes, sitting in accounts cycle after cycle because eligible buyers never apply.
As of the third quarter of 2025, a record 2,624 down-payment assistance (DPA) programs were active nationwide, according to Down Payment Resource’s Homeownership Program Index, an industry database that tracks offerings from state, local, and nonprofit sources. The average benefit across all program types was roughly $18,000 per eligible buyer. On a $360,000 home, that covers a full 5% down payment. In many mid-priced markets, it can eliminate the upfront cash barrier entirely.
Yet Down Payment Resource estimates that the vast majority of those funds go unclaimed each year. That pattern has held even as home prices remain elevated heading into mid-2026, and even as first-time buyers consistently rank the down payment as their single biggest obstacle to ownership.
Where the money comes from
The 2,624 programs span every level of government along with a wide range of nonprofit organizations. The money reaches buyers in several forms:
- Outright grants that never need to be repaid.
- Forgivable loans that are written off after the buyer lives in the home for a set period, often five to ten years.
- Deferred-payment second mortgages with no monthly payments due until the home is sold or refinanced.
State housing finance agencies (HFAs) run many of the largest programs. California, Texas, Florida, and Illinois each administer multiple statewide options, and hundreds of cities and counties layer on local assistance. The Texas Department of Housing and Community Affairs, for instance, offers up to 5% of the loan amount as a forgivable second lien through its My First Texas Home program, available to buyers earning up to 115% of area median income in targeted areas.
At the federal level, FHA loans already allow down payments as low as 3.5%. When paired with state or local DPA, a buyer’s out-of-pocket cost at closing can drop to nearly zero.
Most programs share a few common requirements: the home must be a primary residence, the buyer’s household income must fall within published limits, and the buyer must complete a homeownership education course, usually a few hours online or in person. None of those hurdles are unusual. The real obstacle is that most eligible buyers never learn the programs exist.
Why the money sits unclaimed
Rob Chrane, founder and CEO of Down Payment Resource, has pointed to a persistent awareness gap as the central problem. Buyers assume they earn too much to qualify, or they never hear about assistance from the professionals guiding their purchase. A 2024 National Association of Realtors survey found that 38% of first-time buyers said saving for a down payment was the most difficult step in the process, yet only a fraction reported being told about assistance programs by their agent or lender.
Three barriers come up repeatedly in industry research:
- Buyer assumptions. Many households with incomes well into the middle class qualify for help but never search for it, believing assistance is reserved for very low-income applicants. In reality, income ceilings for many programs reach 120% or even 150% of area median income, which in a metro like Denver or Raleigh can mean households earning six figures.
- Agent and lender gaps. Not all real estate agents and loan officers are trained on local programs, and some avoid them because they add paperwork or extend closing timelines.
- Timing pressure. In competitive markets, buyers feel pressure to submit offers quickly. Assistance applications can take days or weeks to process, and some sellers prefer bids without additional contingencies.
The relative weight of each factor varies by market. A buyer in a slow-moving rural county may have plenty of time to apply but no local housing counselor to point the way. A buyer in a hot metro may know about a program but lose out on homes while waiting for approval.
What the credit and down-payment data shows
Separate data from Realtor.com and ICE Mortgage Technology shows that average FICO scores among successful mortgage borrowers remained at a 10-year high through the third quarter of 2025. That detail matters because most DPA programs set minimum credit scores between 620 and 680. If the typical approved borrower already clears that bar comfortably, the pool of people who could qualify for help but are not using it is likely very large.
Down payments themselves have held relatively steady as a share of purchase price. According to NAR’s 2024 Profile of Home Buyers and Sellers, the median down payment for all buyers was about 15%, while first-time buyers put down closer to 8%. For a first-time buyer putting 8% down on a $350,000 home, that is $28,000 in cash. An $18,000 DPA benefit would cover nearly two-thirds of it. For buyers in lower-cost markets purchasing at $250,000, the same benefit could wipe out the down payment requirement altogether.
What we still don’t know
No single public database tracks total dollars appropriated across all 2,624 programs against total dollars disbursed in a given year. Individual state housing finance agencies publish annual reports, but nobody has aggregated them into a reliable national utilization rate. That means the widely cited claim that “most of the money goes unclaimed” is grounded in consistent program-level reporting and analyst estimates from organizations like Down Payment Resource, not one audited national figure. It is directionally credible, but readers should understand the limitation.
It is also unclear how much of the record program count reflects genuinely new funding versus the repackaging of existing dollars. Some initiatives share the same state or federal funding pool but appear as separate line items because different municipalities administer them. Buyers searching for assistance should focus on the dollar amount and terms available to them rather than the raw program count.
Sustainability is another open question. Many programs rely on a mix of dedicated housing trust funds, general tax revenues, and federal block grants such as HOME and CDBG. A downturn in local revenues or a shift in federal spending priorities could shrink future appropriations even as affordability challenges persist.
How to find and use these programs
For buyers reading this in mid-2026, the practical steps are straightforward:
- Start with your state housing finance agency. Every state has one. A web search for “[your state] housing finance agency down payment assistance” will surface current offerings, income limits, and lists of approved lenders.
- Use Down Payment Resource’s free lookup tool. The eligibility screener lets you enter a ZIP code and see which programs serve your area, along with benefit amounts and basic requirements.
- Ask your lender early, and be specific. Not every loan officer works with every program. If your lender is unfamiliar with local assistance, contact one of the participating lenders listed on your state agency’s website. Some programs require you to use an approved lender to access the funds.
- Complete homeownership counseling before you need it. Most programs require a HUD-approved course. Finishing it in advance removes a bottleneck when you are ready to make an offer. The CFPB’s counselor locator can help you find one nearby.
- Budget for timing. Some programs process applications in days; others take weeks. Knowing the timeline before you start house-hunting lets you set realistic expectations with your agent and avoid losing a home to a faster-moving bid.
Why this gap persists
The disconnect between available assistance and actual uptake is not a new problem, but the scale of it in 2026 is harder to justify. The money is already allocated. The eligibility criteria are not especially restrictive. What is missing, more than anything, is a clear line of sight between the buyer who needs help and the program that can provide it.
Until better national tracking exists and the professionals involved in every transaction treat DPA screening as a routine part of the process, billions of dollars will continue to sit in accounts that were created for the express purpose of being spent. For any first-time buyer who has been told they cannot afford a down payment, the most important next step is a simple one: check whether someone has already set aside the money for you.
