Down Payment Assistance Programs for Home Buyers in 2023

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Preparing to buy a home for the first time can be a daunting prospect with all of the factors to consider and steps to complete, not to mention the large financial investment involved in the initial downpayment. Because this is often the part of the home buying process that buyers either find most intimidating or that discourages them from homeownership altogether, we’d like to highlight the many financial assistance programs that are available to help make the dream of homeownership a reality.

We’ve done the work of sifting through the federal, state, county and city programs to share the best down payment programs available in the Portland metro area. These programs apply to a range of income levels, so you may find more than one that applies to you.

What is Down Payment Assistance?

The types of down payment assistance programs vary of course, as do their qualifications. Some come in the form of grants – or cash assistance – to support lower-income buyers in putting a downpayment on a home. These programs are usually offered to first-time homebuyers, who are defined in loan terms as anyone who has not owned and occupied a primary residence in at least three years.

For example, the well-known FHA loan program lowers the bar for homeownership by enabling buyers to buy a home with a down payment of only 3.5% – instead of the standard 20% – of the purchase price. It does require the buyer to purchase mortgage insurance, but it can provide a financial path to homeownership for the buyer that may not have existed before.

If an FHA loan is not the right fit for you, the good news is that both the state of Oregon and the city of Portland offer some great alternatives for down payment assistance, which we’ll outline below.

Oregon Housing and Community Services (OHCS) Programs

OHCS Down Payment Assistance (DPA)

To qualify for downpayment and/or closing costs assistance, eligible homebuyers must complete their Homebuyer Education program and coaching through a qualified organization, after which funds can be accessed through an approved lender. The program description does not go into detail on whether the funds are treated as a grant or a loan, but an approved lender will have more information on the specifics of this program. Learn more about the DPA program here.

OHCS Oregon Bond Residential Loan Program

The Oregon Bond Program “provides competitive rates helping eligible families increase their home purchasing power and keep their monthly house payments affordable.” In the spirit of supporting the community, it utilizes previous bonds for funding. Its Cash Advantage Program provides borrowers a competitive interest rate of 5.75% plus cash equal to 3% of their loan amount to help offset their closing costs. The Rate Advantage Program offers an even lower interest rate of 5% and a lower monthly payment, further stretching a homebuyer’s purchasing power.

In order to qualify for the Oregon Bond Program, you must:

  • Be an Oregon resident first-time home buyer (have not owned in 3 years)
  • Choose an OHCS-approved lender
  • Purchase a single-family home, condo, or manufactured home
  • Meet purchase price requirements
  • Meet household income limits (these requirements are waived for targeted areas)
  • Complete the Homebuyer Education course
  • Use a housing counselor

First Time Home Buyer Savings Account

Tax-advantaged savings accounts designed to enable first time home buyers to save for a down payment on a single-family home are available through the Oregon Department of Revenue. First-time home buyer savings accounts (FTHBSA) allow you to deduct the amounts you deposit, plus the earnings on your deposits, from your state taxes. An FTHBSA can be opened at any time until December 31, 2026, and the money deposited into the account must be used within 10 years for qualifying home-buying costs on the purchase a single-family home such as:

  • Down payment
  • Appraisal and inspection fees
  • Loan origination fees
  • Title insurance / other closing costs
  • Realtor commissions

Down Payment Assistance Loan (DPAL) Program

The Down Payment Assistance Loan (DPAL) is designed to “help first-time homebuyers purchase a home within the city limits of Portland,” and it acts as a second mortgage loan funded by the Portland Housing Bureau (PHB). The PHB works in partnership with local community organizations to select eligible households for the program. The DPAL also offers a long-term loan forgiveness incentive, starting at 50% of the loan after 15 years, for borrowers in good standing.

To qualify for DPAL, you must:

  • Be a first-time home buyer (have not owned in 3 years)
  • Be approved for a mortgage through one of its community partners
  • Maintain an annual household income at or below 100% of Portland’s current Area Median Income (AMI), adjusted for family size
  • Maintain no more than $10,000 in combined liquid assets
  • Contribute a minimum investment of at least $500
  • Complete a HUD-approved home buyer education course

Portland Housing Center’s Mortgage/Down Payment Assistance Program

Portland Housing Center is a nonprofit that has been working in the community to provide access to affordable housing since 1991, providing homebuyer education and services like down payment/closing cost assistance, grants, competitive mortgage loans, matched savings, tax incentives and more.

Beware of Scams for First Time Homebuyers

Rent to own (or “lease option / lease to own”) offers are sometimes legitimate in a suffering housing market as a last resort for landlords. However in Portland’s thriving real estate market, these often wind up being elaborate scams and it is best to stay clear of them.

Credit repair scams are becoming more and more common. Check out this advisory by the Federal Trade commission to know what to look for.

Scams are unfortunately numerous and always evolving, so it is wise to stick with official programs and nonprofits with recognizable names like the FHA loan and Portland Housing Center. Government housing departments found on the state of Oregon’s official website are also a reliable resource.

Talk to a Trusted Expert

We are experts on the home buying process and can provide guidance on the program that might be the right fit to assist you in buying your new home. Contact our top 1% buyers team today at 503-773-0000 or chat with the bot on our site. We’d love to help you make your dream of homeownership a reality!

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