Iowa Finance Authority Down Payment Assistance: What Every Iowa Homebuyer Should Know

Buying a home is one of the biggest financial decisions most people ever make. But for many Iowans, the biggest hurdle isn’t the monthly payment. It’s the upfront costs: the down payment, closing costs, and prepaid taxes and insurance.

That’s where the Iowa Finance Authority (IFA) comes in.

IFA offers powerful programs designed to reduce how much cash buyers need at closing, making homeownership more accessible for first-time buyers, returning buyers, and military service members across Iowa. In this guide, we break down the most popular options and show how they work alongside your primary mortgage.

How Iowa Finance Authority Assistance Works

IFA programs don’t replace your main home loan. Instead, they work with any common first mortgage type:

• Conventional

• FHA

• VA

• USDA

Think of IFA as your “second layer” of financing, a subordinate loan or grant that lowers your upfront cost and reduces what you need to bring to closing.

IFA currently offers two primary forms of assistance:

• A $2,500 grant

• A 5% down payment assistance loan

Both programs help, but one offers significantly more value for most buyers.

Option 1: The $2,500 Grant

Let’s start with the simplest one.

The $2,500 IFA grant:

• Does not need to be repaid

• Can go toward your down payment or closing costs

• Is available to qualifying buyers

This grant is helpful, but limited. Most lenders, including Blake, see buyers get far more benefit from the next option.

Option 2: The 5% Down Payment Assistance Loan (Most Popular)

This is the program Iowa buyers use the most, and for good reason.

How it works:

• IFA provides a loan equal to 5% of your home’s purchase price

• 0% interest

• No monthly payments

• You repay it only when you sell or refinance

• Can be used toward down payment, closing costs, or both

For many buyers, the 5% assistance loan can completely eliminate upfront costs, sometimes even resulting in money back at closing.

It’s one of the strongest down payment assistance programs in the country.

IFA’s Three Main Program Categories

IFA divides its assistance programs into three major buckets.

1. FirstHome Program (First-Time Buyers or 3 Years Removed)

You qualify if:

• You are a first-time homebuyer, or

• You haven’t owned a home in the last three years

Benefits include:

• Reduced interest rates

• Eligibility for the 5% assistance loan or $2,500 grant

• Works with any major mortgage type

This program is perfect for first-time homebuyers who need to limit their out-of-pocket expenses.

2. Homes for Iowans (Buyers Who Have Owned Recently)

If you have owned a home within the last three years, you may qualify under Homes for Iowans.

Key benefits:

• You can still access the 5% down payment assistance loan

• You do not have to be a first-time homebuyer

• Income limits are more flexible

The tradeoff: Rates may be slightly higher with this program. But for many buyers, the assistance still outweighs the rate difference.

3. Military Homeownership Assistance Program (The Bonus Benefit)

This is where IFA truly shines.

For eligible service members, veterans, Reserve, or National Guard members, IFA offers:

A $5,000 Military Grant

• No repayment required

• Can be used in addition to the 5% assistance loan

• A genuine, no-strings-attached thank-you for your service

Eligible buyers can effectively stack:

• The 5% assistance loan, plus

• The $5,000 military grant

This combination can reduce upfront costs dramatically for military buyers.

Income & Purchase Price Limits

All IFA assistance programs come with:

• Household income limits, and

• Purchase price limits

Both of which vary by county.

Because limits shift across county lines, it’s essential that your lender checks eligibility based on exactly where you plan to buy. Many buyers qualify easily, but it’s important to verify early so there are no surprises once you’re under contract.

Why These Programs Matter

Down payment assistance can make a meaningful difference in your homebuying journey:

• You may bring little to no money to closing

• Many buyers even receive a check back after closing

• You can buy a home sooner instead of waiting years to save

• You retain more cash for furniture, emergencies, or moving expenses

• It lowers stress and increases affordability

For first-time buyers especially, IFA is one of the best tools available in Iowa.

Final Thoughts: Is IFA Right for You?

Whether you’re:

• A first-time homebuyer

• A returning buyer

• A veteran or active-duty service member

IFA may offer exactly the assistance you need to make homeownership a reality.

Between the $2,500 grant, the 5% assistance loan, and the $5,000 military grant, many Iowans can dramatically reduce their upfront costs, often to near zero.

If you’re considering buying a home in Iowa, it’s absolutely worth exploring these programs with your lender. They could make the difference between waiting and moving forward.