HMDA analysis shows wide gap in down payment assistance use

Housing is generally considered affordable when it consumes no more than 30% of a household’s gross income, but for many buyers, especially first-timers, saving enough cash for a down payment remains the biggest barrier.

That’s according to a new analysis by Down Payment Resource (DPR) in partnership with the Urban Institute. They dug into Home Mortgage Disclosure Act (HMDA) data to examine eligibility for down payment assistance (DPA) programs.

The analysis suggests that while DPA programs can help borrowers navigate that barrier, misconceptions about borrower risk and loan quality have limited their use. DPA programs can lower a borrower’s loan-to-value ratio by an average of 8.8%, according to DPR, potentially improving mortgage eligibility and reducing upfront costs at closing.

DPR and Urban Institute used HMDA data from the nation’s 10 largest metropolitan statistical areas and found that 43.6% of originated purchase mortgages were eligible for DPA programs. Nearly 80% of Federal Housing Administration (FHA) loan applicants likely could have qualified for a down payment program, but Department of Housing and Urban Development (HUD) data shows only about 15% of FHA borrowers used government-sourced down payment assistance.

That leaves a gap of nearly 65 percentage points between eligible borrowers and actual program participation, suggesting that many qualified homebuyers were either unaware of available assistance or did not access it during the mortgage process.

“The gap between borrowers who are eligible for down payment assistance and those who actually use it is striking. This suggests the mortgage industry still has work to do when it comes to raising awareness about these programs and integrating into the early stages of the homebuying process,” said Miki Adams, president of CBC Mortgage Agency, a federally chartered housing finance agency.

A similar pattern was found among conventional borrowers. About 44% of borrowers using conventional mortgage products were eligible for down payment assistance, but fewer than 10% used these programs.

Advocates say the disconnect represents a missed opportunity in a housing market still strained by elevated home prices, higher mortgage rates and limited entry-level inventory.

“The report makes clear that many borrowers who qualify for down payment assistance are already successfully qualifying for mortgages,” Adams said. “For first-time buyers, the issue is often not about credit quality or the ability to make payments, but access to the upfront cash needed to buy a home in a market where prices are outpacing wages.”

“One of the more important takeaways from the report is home prices have grown much faster than wages, which means buyers who would have had little trouble saving for a down payment in prior years are now finding that hurdle much harder to overcome,” she added.

Critics of DPA programs have sometimes linked them to concerns about FHA credit quality, but housing advocates argue the data does not support the claim that the programs introduce riskier borrowers into the market.

HUD reported that 42.31% of FHA purchase borrowers used some form of down payment assistance in fiscal year 2025. But more than half of that assistance came from family member gifts rather than government or housing finance agency programs. Of the total, 23.16% came from family gifts, while 17.74% came from government sources.

HUD also reported that average FHA borrower credit scores have increased for four consecutive years, reaching a 10-year high average of 679 in fiscal year 2025. Members of DPR’s Housing Finance Agency Advisory Group reported average borrower credit scores above 700 in recent lending activity.

HUD data also showed FHA debt-to-income ratios have remained stable over the past three years and declined slightly in the latest fiscal year.