New 100% FHA Home Loans with Down Payment Assistance

For many first-time homebuyers, saving for a down payment is one of the most challenging parts of buying a home. The Federal Housing Administration (FHA) offers a great solution with their FHA mortgage. Traditionally, these loans require a 3.5% down payment, but with recent changes in 2025, eligible buyers can now access 100% FHA home loans through down payment assistance programs (DPA). This means that qualified buyers can purchase a home with little to no out-of-pocket funds.

In this guide, we’ll cover how FHA loans work, explore the details of down payment assistance, explain the pros and cons of using DPA, and outline the requirements to getting approved.

How FHA Loans Work:

FHA loans are insured by the Federal Housing Administration, making them a popular option for first-time homebuyers or those with lower credit scores. One of the biggest benefits of an FHA loan is its low down payment requirement—typically 3.5% of the home’s purchase price. This makes homeownership more accessible for buyers who may not have the funds for a larger down payment.

In 2025, the FHA loan limit varies by county, but buyers can generally borrow up to $524,225 in most parts of the country, with higher limits up to $1,209,750 in more expensive housing markets. This is for a single 1-unit, loan limits on muti-unit properties are even higher as seen in the chart below. While buyers traditionally need to cover the 3.5% down payment themselves, new down payment assistance programs are making it possible for eligible buyers to secure a home with no upfront down payment.

What is Down Payment Assistance?

Down payment assistance (DPA) programs help buyers by covering all or part of the down payment required for an FHA loan. These programs are available through a variety of sources, including state and local government agencies, nonprofit organizations, and sometimes even private lenders. They include programs like Hometown Heroes, SHIP, Chenoa and many more from private lenders.

With DPA, first-time homebuyers can obtain the 3.5% down payment they need without having to save the entire amount. This essentially turns the FHA loan into a 100% financing option, meaning buyers can close on their home without any upfront down payment. However, buyers will typically still need to cover upfront closing fees like appraisal, home inspection, etc.

Pros and Cons of Down Payment Assistance:

Before diving into DPA programs, it’s important to understand the advantages and potential drawbacks of using down payment assistance to finance your home.

Pros:

Reduced upfront costs: The most obvious benefit of down payment assistance is the ability to buy a home without needing to save for a large down payment. This makes homeownership more accessible, especially for those in expensive housing markets.
Homeownership sooner: For many, saving for a down payment can take years. DPA allows first-time buyers to enter the housing market much sooner, avoiding the risk of rising home prices while they save.
Flexible program options: Down payment assistance programs are available through various sources, with some offering forgivable loans or grants. Forgivable loans may not need to be repaid if you meet certain criteria, such as living in the home for a set number of years.
Potential for better loan terms: By eliminating or reducing the need for a large down payment, DPA can help buyers qualify for better loan terms than they might otherwise have been able to secure.

Cons:

Income and eligibility limits: Certain down payment assistance programs may have income and eligibility requirements. These programs are typically designed to help low- and moderate-income buyers, meaning some may not qualify if they earn above a certain threshold.
Repayment terms: While some DPA programs offer forgivable loans, others may require repayment. Some programs attach a second mortgage to the home, which may need to be repaid when you sell or refinance.
Higher interest rates: In some cases, taking advantage of down payment assistance can result in slightly higher interest rates. This is because lenders view 100% financing as a higher risk.
Extra paperwork: Applying for down payment assistance can add extra steps to the mortgage process, including additional paperwork and waiting periods for program approval.
Homebuyer Education: Some DPA programs may require the homebuyer to complete an online homebuyer education course. This course (if required) generally takes less than an hour to complete, but is something to be aware of.

How to Qualify for a 100% FHA Loan with DPA

Qualifying for a 100% FHA loan with down payment assistance requires meeting several criteria. Here’s what you’ll need to know:

Credit score: The FHA requires a minimum credit score of 580 to qualify for a loan with a 3.5% down payment. However, most down payment assistance programs require a higher credit score. In most cases, you’ll need a score of at least 640 to qualify for DPA. A higher score will also improve your chances of securing better terms.
Income limits: Some down payment assistance programs have income limits that vary by region and household size. These limits ensure that the programs are helping those who need it most. Some programs are more flexible, but in general, your household income will need to fall below the program’s threshold.
Debt-to-income ratio (DTI): To qualify for an FHA loan, your debt-to-income ratio should typically be no more than 43%. This includes your mortgage payment, property taxes, homeowner’s insurance, and any other monthly debts such as credit card payments or student loan payments.
First-time homebuyer status: Many DPA programs are specifically designed for first-time homebuyers. In most cases, you will still qualify as a first-time buyer if you haven’t owned a home in the last three years.
Homebuyer education course: Many down payment assistance programs require applicants to complete a homebuyer education course. This course typically covers the basics of homeownership, budgeting, and the mortgage process.
Property requirements: The property you’re purchasing will need to meet FHA guidelines, which include safety and livability standards. The home must be your primary residence, and it must be in overall “good repair” according to basic HUD standards. Investment/rental home purchases are not permitted.

Steps to Get Approved

Check your eligibility: Start by reaching out to us to see what local and state-level down payment assistance programs are available. We can also help you find programs that work with FHA loans, or other government loan programs like USDA, VA, etc.
Get pre-approved for DPA: Work with a lender who specializes in DPA loans. We will review your credit score, income, and debt-to-income ratio to determine if you meet the requirements. The entire application process is simple and often completed in under 30 min.
Apply for down payment assistance: Once you’re pre-approved for an FHA loan, you can begin applying for down payment assistance. Be prepared to submit documents like tax returns, pay stubs, and bank statements to prove your eligibility.
Complete homebuyer education: If required, enroll in a homebuyer education course as soon as possible. This is often a prerequisite for receiving down payment assistance, depending on the program and property state.
Close on your home: Once approved for both your FHA loan and down payment assistance, you can move forward with the home purchase process. Your down payment will be covered, but you’ll still need to cover other costs like closing fees.

100% FHA home loans with down payment assistance provide an excellent opportunity for first-time homebuyers who are ready to own a home but haven’t been able to save enough for a down payment. While these programs come with certain eligibility requirements and potential trade-offs, they can make the dream of homeownership more accessible.

Before applying, it’s important to fully understand the pros and cons of using down payment assistance and to work with a knowledgeable lender who can guide you through the process. Have questions or ready to get started? Please call us above, or submit the Info Request Form below for a rapid response 7 days a week.