Zillow Home Loans Launches Down Payment Assistance Program

The new initiative offers interest-free second loans for FHA borrowers to help cover upfront homeownership costs.

Updated on Oct. 28, 2026 in Residential

Flat opaque gouache-painted editorial illustration showing three house-shaped blocks and a wooden key, symbolizing homeownership support. — Zillow Home Loans has introduced an interest-free down payment assistance program to help FHA borrowers cover initial home purchase costs. AI Illustration. Upload story photo >

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Zillow Home Loans has introduced a new down payment assistance program that provides FHA borrowers with a second loan for up to 3.5% of a home purchase price. The program is designed to reduce the barrier of upfront costs for prospective homeowners.

Why it matters

High entry costs remain a primary obstacle for many looking to purchase a property. This initiative aims to address those financial hurdles by providing interest-free liquidity that does not require monthly payments.

The program provides a second loan of up to 3.5% of the purchase price, which is forgiven after five years of owner-occupancy. Borrowers must maintain a minimum credit score of 640 and the program is available in 43 states and Washington, D.C.

The players

Zillow Home Loans

This mortgage lending division of the real estate technology company Zillow Group provides financing options for residential home buyers.

The details

The second loan carries no interest and requires no monthly payments, provided the borrower remains an owner-occupant for five years. Participants may combine this assistance with 6.5% of their own funds to reach a 10% total down payment without income caps.

Zillow Home Loans announced the down payment assistance program on October 28, 2026.
The second loan is eligible for forgiveness after five years of ownership.

Culture Shift

This program marks a departure from the historical reliance of home buyers on retirement savings by offering an alternative source of capital for down payments. It reflects an effort to mitigate the financial strain currently placed on household assets during the property acquisition process.

Borrowers in eligible states can reduce their initial cash requirement by using this second loan to cover 3.5% of their home purchase. Interested individuals should verify if their state of residence is included, as the program is not available in seven specific states.

The takeaway

This initiative provides a viable pathway for buyers who have the credit capacity but lack the immediate cash for a full down payment. Borrowers should note that the second loan must be repaid immediately if they decide to sell, refinance, or move before the five-year forgiveness term ends.