Can CDBG be used to provide down payment assistance to income-eligible homebuyers? If so, what regulations govern the provision of CDBG down payment assistance?
Date Published: May 2015
CDBG funds can be used for down payment assistance up to 50% of the lender required down payment amount. This can be done as a stand-alone homeownership assistance activity under 24 CFR 570.201(n) as well as other eligible costs such as principal write-downs, closing costs, etc. Down payment assistance provided under 24 CFR 570.201(n) is restricted to low/moderate income households. If down payment assistance is funded as a public service, this activity would count towards the 15 percent public services cap under 24 CFR 570.201(e). Here, the grantee is not limited to providing 50 percent of the required down payment. The low/moderate income housing national objectives may be used for this activity. The Guide to National Objectives and Eligible Activities for Entitlement Communities may also be helpful to you.