The DPA & Hero
ProgramsPlaybook

What DPA Actually Is.

Down Payment Assistance is a category — not a single program. Multiple federal, state, and local entities offer DPA. They differ in structure, eligibility, and repayment terms.

The Three DPA Structures

1. Forgivable Second Mortgage

DPA is structured as a "silent" second mortgage that earns no interest and requires no monthly payment — and is forgiven on a defined schedule (e.g., 10% per year over 10 years, or 100% at year 36 if you maintain owner-occupancy). If you stay in the home through the forgiveness period, the DPA is effectively a grant.

Examples: PHFA K-FIT (Pennsylvania), THDA Great Choice DPA (Tennessee).

2. Deferred Second Mortgage

DPA is structured as a zero-interest second mortgage with no monthly payment, but repayment is required when you sell, refinance, or no longer occupy the home as primary residence. The amount doesn't grow with interest — you repay exactly what was lent.

Examples: Florida Hometown Heroes (FL), CHFA SmartStep (CO), MSHDA MI 10K DPA (MI), CalHFA MyHome (CA).

3. Grant

DPA is given as an outright grant — never repaid under any conditions. Rare and the most valuable structure.

Examples: TSAHC Homes for Texas Heroes (TX) provides up to 5% DPA as a grant.

How DPA Stacks With First Mortgages

DPA programs typically pair with a first mortgage (FHA, VA, USDA, or conventional). The DPA covers some or all of the buyer's down payment + closing costs. Combined structure:

• First mortgage: 96.5-100% of purchase (FHA or VA typically).
• DPA second: Covers buyer's required cash contribution (0-5% of purchase).
• Effective buyer cash to close: $0 to a few thousand dollars (taxes, prepaid insurance).

The Federal Programs.

Good Neighbor Next Door — 50% Off List Price

The single most generous federal homebuyer program available to qualifying first responders and teachers. HUD offers a 50% discount on the list price of HUD-owned single-family homes in designated revitalization areas.

• Eligible occupations: Full-time sworn law enforcement officers, K-12 teachers, firefighters, and EMTs.
• Discount: 50% of list price, structured as a silent second mortgage forgiven after 36 months of owner-occupancy.
• Required: 3-year owner-occupancy commitment.
• Inventory: HUD-foreclosed homes in revitalization areas, listed at hudhomestore.com. Inventory turns over weekly.
• Financing: Layers with FHA, FHA 203(k), or conventional financing on the remaining 50%.

The 1% Down Conventional

Buyer brings 1%. Lender contributes 2%. Closing day, buyer has 3% equity. Income limit: 80% of area median income (AMI). For working buyers under the AMI threshold, this is one of the most powerful entry points available.

Fannie Mae HomeReady & Freddie Mac Home Possible

3% down conventional programs designed for low-income buyers. Reduced PMI rate. Accepts non-borrower household income for qualifying. Eligibility: ≤80% AMI for many properties.

Florida Hometown Heroes — The Deep Dive.

The single largest first-responder DPA program in the United States. Funded by Florida Housing Finance Corporation. Eligible to 100+ occupations.

The Benefit

Up to $35,000 in down-payment and closing-cost assistance. Specifically, 5% of the first mortgage amount, capped at $35,000. Structured as a zero-interest deferred second mortgage — repaid at sale, refinance, or move-out.

Eligible Occupations

Florida Hometown Heroes is unusually broad. The program covers full-time Florida workers in 100+ eligible roles:

• All sworn law enforcement officers (state, county, municipal)
• All firefighters and paramedics (including private ambulance)
• All K-12 teachers (public and certified private schools)
• Healthcare workers — nurses, doctors, therapists, paramedics, EMTs
• Childcare workers
• Active-duty military stationed in Florida
• Veterans
• Many state, county, and federal government roles
• Specific trade, public-service, and infrastructure occupations

Full eligibility list is maintained by Florida Housing — Hero verifies job title against the current list on every Florida file.

Income & Price Caps

• Income limit: Varies by county, typically $130,000-$150,000 household income.
• Price cap: Varies by county, generally $500,000-$700,000 depending on metro.
• Property type: Primary residence single-family or condo. Must be in Florida.

Layering With First Mortgages

Hometown Heroes pairs with FHA, VA, USDA, or conventional first mortgages. Hero verifies eligibility for the specific first-mortgage program at application.

Real Math Example

Texas Homes For Heroes.

The cleanest grant-based DPA program in the country. Administered by Texas State Affordable Housing Corporation (TSAHC).

The Benefit

Up to 5% of the first mortgage amount as a DPA grant — never repaid. Combined with a bond-rate first mortgage that often runs slightly below market.

Eligible Occupations

The Homes For Texas Heroes program covers:

• Sworn law enforcement officers
• Firefighters and EMS personnel
• Public school teachers, school librarians, school counselors, school nurses
• Allied health faculty members
• Corrections officers
• Veterans

The Home Sweet Texas Companion Program

TSAHC also runs the Home Sweet Texas Home Loan Program for buyers who don't fit a hero occupation but meet income limits. Same grant structure, broader eligibility — household income up to ~$110K depending on county.

Income & Price Caps

• Income limit: Varies by county. Hero Homes For Texas Heroes is typically more permissive than Home Sweet Texas.
• Price cap: Varies by county.
• No first-time-buyer requirement for veterans.

The State HFA Lineup.

Every state we serve runs its own Housing Finance Agency. Each has a flagship first-time-buyer program, most with first-responder or teacher overlays.

By State

• California — CalHFA MyHome: Up to 3.5% DPA, pairs with CalHFA's FHA or conventional first. Stacks with the Dream For All shared appreciation program.
• Colorado — CHFA SmartStep / SmartStep Plus: 3% DPA, bond-rate first, Teachers Edge overlay for K-12 educators.
• Arizona — AZHFA HOME+PLUS: Up to 5% DPA, bond-rate first mortgage, multiple loan-program combinations.
• Oregon — Oregon Bond Residential Loan: Below-market first mortgage paired with optional DPA, special pricing for educators.
• Washington — WSHFC Home Advantage: 4% DPA, House Key Plus Community Land Trust overlays, opportunity DPA up to 5%.
• Utah — UHC FirstHome: Up to 6% DPA, FirstHome and HomeAgain programs with first-responder enhancements.
• Idaho — IHFA First Loan: Bond-rate first paired with up to 7% DPA, Hero overlay for first responders, educators, and military.
• Michigan — MSHDA MI Home Loan + MI 10K DPA: $10K forgivable DPA, statewide. The strongest first-time-buyer combo in the Midwest.
• Tennessee — THDA Great Choice + Homeownership for Heroes: $6-15K DPA, plus a 0.5% rate discount for first responders, veterans, military, and teachers under the Heroes overlay.
• Pennsylvania — PHFA Keystone Home Loan + K-FIT: Bond-rate first paired with K-FIT forgivable DPA up to 5% of price, 10% forgiven per year over 10 years.

Each state HFA pairs with FHA, VA, USDA, or conventional first mortgages. Hero pre-screens eligibility for every applicable file.

The 6 DPA Mistakes Buyers Make.

1. Assuming you don't qualify. Hometown Heroes covers 100+ occupations. State HFA programs cover broad income ranges. Check before assuming.
2. Not knowing your DPA structure. Forgivable, deferred, and grant DPAs have very different long-term implications. Know which one you're getting.
3. Missing the price cap or income limit. DPA programs have specific caps that vary by county. A buyer who could have qualified for a slightly cheaper home with DPA may have walked away from the program because their first-choice property exceeded the price cap.
4. Skipping the seller-concession opportunity. DPA can be paired with seller concessions. A buyer with both is often closing at $0 cash to close.
5. Letting the DPA review delay the closing. State agency review adds 5-10 days to a typical close. Hero pre-submits DPA files in parallel with underwriting — not after — to minimize delay.
6. Treating DPA as last-resort. DPA is a strategic tool, not a "for buyers who can't afford it" program. Many buyers with substantial cash use DPA to preserve liquidity for renovation, investing, or reserves.

When To Use DPA.

Use DPA whenever you qualify. The math is almost always favorable — even forgivable DPAs that require eventual repayment usually outpace the alternative of holding back cash for years.

Use grant DPA (Texas Homes For Heroes, certain CalHFA structures) over deferred DPA when both are available. Grant DPA is free money; deferred DPA is interest-free borrowed money.

Combine DPA with VA when possible. Most state DPAs stack with VA loans. Veterans regularly close at $0 cash-to-close using VA + state DPA layering.