The Most Versatile DPA in America

There are 2,619 DPA programs in America. All but one fall into the same standard traps. Here's the case for the one that doesn't.

Key Takeaways

• There are 2,619 active homebuyer assistance programs in the U.S. as of Q4 2025. Of the DPA programs in that count, 53% offer partial or full forgiveness over time — your borrower waits out the clock to walk away clean.¹
• No DPA is truly free. In most programs, your borrower's funds must be repaid, leaving them with nothing to show for it. With Arcasa, the help leaves something behind: a solar system on the roof.
• Some DPA programs trigger a 1099 for the borrower, who often has no idea it's coming. Arcasa does not. Avoid an upset customer next April.
• Arcasa is the only nationwide FHA DPA with no income limits, no first-time-buyer requirement, no rate add-on, and no 1099s. It's unlocked through solar, providing equity through real property and utility savings every month. (Okay, okay. Confession-time. We're nearly nationwide. NY, HI, and AK are still on the way.)
• Unlock up to 5% of the purchase price as a grant or forgivable second, with no monthly second payment, forgiven after close (on average 60 days). 5.5% for specific lenders.
• Solar adds an average of 4.1% to a home's sale price² and lowers your borrower's monthly utility bill from day one.
• One product, five plays: down payment, rate buydown, closing costs, first AND repeat home buyers, and refinances.

What Is the Most Versatile DPA Program for FHA Loans?

Arcasa's Energy-Smart DPA is the most versatile down payment assistance program available to FHA borrowers nationwide. It works in 47 states (NY, HI, and AK are on the way) with no income limits, no first-time homebuyer requirement, and no rate add-on on FHA first. It pairs a market-rate FHA mortgage with a forgivable second or grant of up to 5% of the purchase price. There is no second monthly payment. The borrower does not get a 1099. The forgiveness mechanism is what makes it different. Most DPAs are forgiven by making payments over several years. Arcasa forgives when a solar energy system is installed on the home, which means your borrower walks away from the assistance with an actual asset on the roof.

The rest of this post is the structural argument for why that matters. But first, a story about a guy who almost lost a house because he got a raise.

Last fall, Dan Harding at Intercap Lending faced a difficult scenario. His client was set up on a Utah Housing loan, already under contract, right at the finish line of closing. Then payroll changed. The client got a raise. The kind of raise you celebrate. Sounds good, right? In reality, this was the kind of raise that, in this case, pushed him over the Utah Housing income cap by the tiniest amount.

Eligible on Tuesday. Ineligible on Wednesday. Same client, same house, same down payment. New W-2, new problem. Welcome to the American Dream, fine print edition.

"You guys honestly saved the deal."

Arcasa stepped in. The client still closed as scheduled. He was thrilled. And the part Dan mentioned almost as a footnote, which is also the part I want you to stop and notice: the client had been planning to put solar on the house anyway. Sometimes the universe throws you a bone.

So let me restate the whole thing. A would-be homeowner found himself boxed out of the housing assistance system for the cardinal sin of checks notes getting a raise. He was rescued by Arcasa's program, which provided him with the funds and the solar system he was already going to buy. Net downside: zero. Net upside: a closed loan, a happy client, and a producing asset on the roof.

Not convinced. Let's dig in.

How Big Is the DPA Market in 2025?

Two thousand. Six hundred. And nineteen.

That's a LOT of active homebuyer assistance programs in the U.S. as of Q4 2025.¹ A 6% jump year over year.¹ The largest funders? Municipalities and local program providers (39%), nonprofits (21%), and state housing authorities (18%).¹ California alone has 353 programs from 223 providers. Florida follows with 196. Texas has 128.¹ Every county in America has at least one DPA program.¹ There are more DPAs than Starbucks in Manhattan, and that's saying something.

So why are we still hearing borrowers say, "I didn't think I qualified for any of those"?

These programs move real money:

• The average benefit is roughly $18,000 per borrower.¹
• State HFAs alone delivered $1.5 billion in DPA volume in 2023, up 43% from 2021.³
• Nearly 40% of FHA borrowers used some form of DPA in FY24, including 17% from a government program.⁴

Demand is there. Supply is there. The problem is structural.

Of the DPA programs in DPR's count, 53% (1,035 programs) offer partial or full forgiveness over time.¹ The other 47% don't forgive — they're deferred seconds, amortizing seconds, or first-mortgage-rate adjustments your buyer pays off the long way. Add the grants, MCCs, and bond-rate first mortgages and the picture is the same: most DPA in this country comes with a string. Most of that string follows your buyer to the next refi or sale.

This isn't some big secret. Nothing is free. Public DPA funds are finite, and the goal is to keep them circulating to the next family. Programs are built with repayment triggers, occupancy clauses, and recapture provisions to keep the dollars moving. Honest work. But for the buyer sitting at the closing table, "honest work" reads as "second lien."

What Do State HFA DPA Terms Actually Look Like?

Let's be real: nobody wakes up thinking, 'Today's the day I read the DPA program guidelines.' Good news: you don't have to. The gap between the marketing brochure and the fine print is real—and you shouldn't need a decoder ring or a law degree to know what you're signing up for.

Here's a snapshot of one representative product from each state. Most of these HFAs offer multiple flavors; we picked one of each to keep the table readable.

• California (CalHFA MyHome): Up to 3.5% of purchase price as a deferred-payment junior loan when paired with FHA, or up to 3% with conventional, VA, or USDA. 1% simple interest accrues annually until sale, refinance, payoff of the first mortgage, transfer of title, or default.⁵
• Florida (FL Assist): A $10,000 deferred second at 0% interest, not forgivable. Sale, transfer, refinance, payoff of the first, or non-occupancy makes the full balance due. (Florida Housing also offers more generous siblings — HFA Preferred PLUS forgivable seconds and Hometown Heroes up to $35,000 — but FL Assist is the workhorse.)⁶
• Tennessee (THDA Great Choice Plus): Two flavors. The Deferred Option is a $6,000 forgivable second at 0% interest, forgiven at the end of the 30-year term — sell or refinance before then, full balance due. The Amortizing Option goes up to 5% of sales price (max $15,000), 30-year amortizing, monthly payments at the same rate as the first mortgage.⁷
• Colorado (CHFA): Two products. The DPA Grant (up to 3% of the first) requires no repayment. The DPA Second (up to 4% of the first) is deferred, but CHFA only allows one subordination of that second on a refinance, and only if your buyer stays inside the CHFA FHA Streamline path. Refinance to anything else, and the second must be repaid in full. CHFA HomeAccess seconds aren't eligible for subordination at all.⁸
• Utah (UHC): Two products. The standard Traditional DPA goes up to 6% of the first mortgage (capped at $27,500), 30-year amortizing, with required monthly payments at 1% above the first-mortgage rate (capped at 8%). The Deferred DPA goes up to 3.5% of the first (capped at $27,500), 30 years, 3.5% deferred simple interest, no monthly payment, all principal and interest due at maturity, sale, or refinance.⁹
• Texas (TSAHC): Two programs, same DPA structure. Homes for Texas Heroes is for teachers, school staff (including teacher aides, librarians, counselors, and nurses), police, peace officers, firefighters, EMS, juvenile and adult corrections officers, county jailers, public security officers, nursing and allied health faculty, veterans, and active military. Home Sweet Texas is open to everyone else who qualifies. Both offer 2–5% of the loan amount as either a grant (no repayment, ever) OR a 0%-interest deferred forgivable second lien that fully forgives at the third anniversary (sell or refinance before then, full balance due). Both have county-specific income and purchase-price limits, and both require a 620 minimum credit score.¹⁰¹¹

I am not picking on these programs. They are essential. They have helped tens of thousands of families this year alone. But every one of these structures comes with strings — a lien, a forgiveness clock, an income test, an occupancy clause, a recapture window, or some combination. Even the grant options (which don't get repaid) come bundled with rate add-ons or income caps. Is the one you're picking the most strategic available?

That is the deal. You take the help, you take a string. The strings are how the money keeps moving to the next family. That is not a flaw. That is the system working as designed.

The question, the only question, is what your buyer has to show for the string when it falls off.

The Tax Bill Your Borrower Did Not See Coming

This is the part of the DPA conversation that LOs usually only learn about after a borrower calls them in February, in a panic.

Many forgivable DPA programs, including some of the largest national private DPA providers, issue a 1099 to the borrower when the assistance is forgiven. Forgiven debt is reportable income under IRS rules in many structures.¹² Grant-based programs can issue a 1099-MISC. Forgivable seconds can issue a 1099-C. The borrower then owes income tax on the forgiven amount.

If the assistance was $15,000, the borrower might owe $3,000 to $5,000 to the IRS in a year they were not expecting it. Perhaps it slips your mind. Maybe they didn't read the flier's fine print. But when they find out from their accountant. They call you next.

Imagine the conversation. "Hey, you remember that $15,000 you helped me get last year? Turns out it wasn't free."

Arcasa is structured so that no 1099 is issued to the borrower. That is a meaningful structural difference compared to many large private DPA providers, where the 1099 is part of the program economics. Run the comparison with your borrower at the table. The headline assistance number is great, just don't forget the post-tax assistance number is the actual one.

Why Most DPA Programs Leave Borrowers With No Asset

Here is the structural argument, in one sentence.

Most DPAs trade an obligation for occupancy. Take the help, get into the home, accept the lien, hope time and amortization do their work. After ten, twenty, thirty years, the second is gone. Your buyer is left with whatever appreciation and equity they built on the first mortgage. The DPA itself? Vanishes. Leaves no fingerprints on the balance sheet. The borrower paid the price of the string and, outside of getting into the home, got nothing in return.

Solar leaves fingerprints.

"The combination of broad program eligibility and attractive financial incentives makes Arcasa's Energy-Smart DPA program a compelling option for today's homebuyers, who are actively seeking creative ways to make homeownership more affordable."

Zillow's 2019 national analysis of homes sold across the US found that solar homes sold for 4.1% more on average than comparable homes without solar — an extra $9,274 on the then-median home (~$226K), with premiums up to 5.4% in the New York metro and 4.4% in San Francisco.² Apply the same 4.1% to today's median home and the dollar premium is materially larger. Freddie Mac, working with RESNET and DOE data on roughly 70,000 rated homes, found that energy-rated homes sold for 2.7% more than comparable unrated homes — and within the rated population, better-rated homes sold for 3–5% more than lesser-rated ones. Loans on rated homes also showed lower delinquency rates at DTIs above 45%.¹⁴

That is the resale side. Now look at the operating side, because that's where the math gets uncomfortable for utilities.

EIA's 2024 data puts the average U.S. residential electric bill at $142.26 a month, or about $1,707 a year, at 16.48 cents per kWh and 863 kWh of monthly use.¹⁵ Nominal residential rates have roughly doubled over the last 25 years — from around 8.2 cents per kWh in 2000 to 16.48 cents in 2024 — a compound annual growth rate of about 2.8%. Compound that bill over a 30-year mortgage at 2.8%, and the average American household pays roughly $77,000 in electricity. At 4% annual growth, which is closer to what we have seen since 2022, the same bill compounds to nearly $97,000.

EIA's 2025 Annual Energy Outlook projects continued upward pressure on retail electricity prices through 2050 in the reference case, driven by capacity costs, generation mix transition, and load growth.¹⁶ Bet against that if you want. AI data centers are coming online faster than the grid can absorb them. Power is getting more expensive, not less.

With a typical state HFA DPA, when the forgiveness clock finally runs out, your buyer has less obligation. Good. Job done. Family helped.

With Arcasa, when the forgivable second is forgiven, your buyer has a producing asset on a home they own. The asset pulls real dollars off their utility bill every single month for the next two and a half decades. It also shows up in resale comps the day they list.

The DPA does not just disappear. It produces additional value.

No Income Cap, No 1099, No Rate Add-On, No Excuse Not to Consider Arcasa

Arcasa is an FHA-only down payment assistance program (for now…) built around residential solar.

• Up to 5% of the purchase price, delivered as either a grant or a forgivable second mortgage.
• No second payment. The forgivable second has a 10-year term, 0% interest, and no monthly payments. It is forgiven once the solar system is installed, on average, about 60 days after close.
• No 1099 to the borrower. The structure does not generate reportable income.
• FHA at market rate. No DPA-related rate add-on on the first mortgage.
• No income limits, no first-time-homebuyer requirement. Most state HFA programs cap eligibility at 80% to 140% of Area Median Income (AMI). Arcasa does not.
• Available in 47 states. Any FHA-eligible Arcasa-approved property, condos excluded. NY, HI, and AK coming soon.
• No overlays beyond FHA and AUS. Manual underwriting permitted, high-balance loans permitted, escrow holdbacks permitted.
• Retail, wholesale, and correspondent channels. Live at CrossCountry Mortgage, Intercap Lending, and additional partner lenders nationwide.
• Listed in Down Payment Resource's DPA Directory as of July 2025.¹⁷
• Solar system sized to your borrower's home and consumption, financed into the mortgage as a direct purchase, not a PPA or lease. Monthly utilities go down.
• Optional upgrades: roof replacement, electrical panel upgrade, residential battery storage (BESS), and EV chargers (pending solar budget).

Five Ways Loan Officers Use Arcasa

The reason Arcasa is the most versatile DPA in the country is that it flexes into different buyer problems without changing programs.

• Low on cash but solid on income? Use the DPA for the down payment. Done.
• Rate-sensitive buyer. Redirect Arcasa funds to a buydown instead of a down payment. Same program, lower interest with their lower utilities.
• Closing-cost-short buyer. Use the funds there.
• Repeat buyers. Your buyer who has had every DPA program slam the door because they owned a home five years ago. Arcasa has no first-time-buyer requirement. Door opens.
• Refinance Opportunities. Why not refinance your high-rate home loan as rates continue to drop? Same standard FHA, rate and term structure as always, but with even more monthly savings.

One product, five plays.

A Respectful Word About State and Local DPAs

Listen, most DPA Programs (especially State and Local) deserve a lot of credit. Mortgage revenue bond programs alone have helped 3.6 million families since inception, roughly 100,000 a year.¹⁸ They are essential infrastructure. They have done generational work in this country. Hell, we even have people on our own team who have used them.

The criticism here is not that they exist.

The criticism is that the structural deal these programs offer leaves out too many deserving folks. Cops a county over. Repeat buyers. The dual-income couple is a few thousand dollars over the income line. Borrowers who got a raise mid-closing. The buyer who walked into your office in October to find that the state program ran out of funds in March. Every one of those people deserved help. These programs just had a narrower scope of who they could help.

Frequently Asked Questions

About the Author

Henry N. Smith is co-founder and Chief Experience Officer at Arcasa, the fintech platform behind the nation's most versatile FHA DPA program. Prior to Arcasa, Henry led brand and marketing at SimpleNexus (acquired by nCino), where he helped scale a top mortgage technology platform from Series A through enterprise. He writes about housing finance, energy, and the structural arguments for and against the way America funds homeownership. Connect on LinkedIn.

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