Affordable Homeownership: The Incidence and Effect of Down Payment Assistance

Using data from a panel study of low- and moderate-income homeowners, we assess the determinants of the use of several types of down payment assistance and the effect of using assistance on mortgage performance. Although we find differences in reliance on types of assistance, we find no difference in mortgage performance between those who used assistance and those who did not. Based on these findings, we urge caution in imposing down payment requirements that disproportionately restrict access to mortgage credit.