Zillow Launches Down Payment Assistance for FHA Borrowers
Eligible buyers can receive a 3.5% down payment loan that is forgiven after five years of owner-occupancy.
Updated on Oct. 28, 2026 in Residential
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Zillow Home Loans has launched a down payment assistance program for FHA borrowers, providing a second loan worth up to 3.5% of a home purchase price. The program is currently available to prospective homebuyers in 43 states and Washington, D.C.
Why it matters
The program is designed to lower upfront financial barriers to entry, as many buyers typically rely on savings, investments, or retirement accounts to fund their initial down payment. By offering a secondary loan, Zillow aims to assist those struggling to accumulate cash for an FHA-backed mortgage.
The program offers a second loan of up to 3.5% of the purchase price or appraised value, requiring a minimum credit score of 640. This assistance is not available in Arizona, Delaware, Florida, Massachusetts, New York, Rhode Island, or Virginia.
The players
Zillow Home Loans
A mortgage lending division of the real estate technology company known for its comprehensive home search platform and housing market data.
The details
The program provides a second loan that carries no interest and requires no monthly payments. If a borrower remains an owner-occupant and maintains on-time mortgage payments for five years, the loan is entirely forgiven. If the home is sold, refinanced, or the owner moves before the five-year mark, the loan must be repaid in full.
Timeline
October 28, 2026: Zillow Home Loans announced the down payment assistance program.
After five years: The secondary loan balance is forgiven for qualifying owner-occupants.
The Home Front
This program operates within the existing framework of the Federal Housing Administration (FHA) mortgage insurance program, which typically requires low down payments for eligible buyers. It marks a push to bridge the gap between traditional FHA requirements and the cash-on-hand reality for many buyers.
If you are planning to purchase a home, check if you meet the 640 credit score threshold and reside in a participating state. Consult with a licensed mortgage professional or financial advisor to determine if an FHA loan with secondary assistance is the right path for your specific long-term financial goals.
The takeaway
Prospective buyers should review their current liquid assets versus debt requirements to decide if a five-year commitment to a property aligns with their housing stability plans. Always document all loan terms, especially the repayment obligations triggered by a sale or refinance within the five-year window.
Further reading
Learn more about the current housing market at Residential.
Source note: This article includes information reported by HousingWire.
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