Down Payment Assistance in Missouri, Explained Properly
Program and regulatory figures verified September 26, 2026. Details change; confirm your scenario with us.
Missouri's assistance is genuinely good. The way it is described almost everywhere is genuinely wrong, and the gap between the two costs people real money.
The sentence that changes the decision
MHDC's First Place and Next Step operations manuals, both revised 3/11/2026, use the same words: the second loan is forgiven if the borrower stays in the home and maintains the original loan for ten years, and after year five the second mortgage will begin diminishing by 1/60 every month until year 10 when it will be completely forgiven.
Read the middle clause again. After year five. For the first sixty months nothing is forgiven at all. The burn-down only runs across years five through ten.
| You sell or refinance in… | What is forgiven | What you repay |
|---|---|---|
| Year 2 | Nothing | The full 4% |
| Year 4 | Nothing | The full 4% |
| Year 7.5 | About half | About half |
| Year 10 | All of it | Nothing |
"Forgiven over 10 years" implies year four leaves you owing 60%. It leaves you owing 100%. The full schedule, and who it actually hurts · run your own numbers.
MHDC says this plainly, to its credit
From MHDC's own FAQ: is MHDC's down payment assistance considered a grant? No, these are not grant funds. MHDC's DPA is a second loan for the amount of the DPA.
That is an unusually direct thing for a housing agency to write, and it is worth taking at face value. MHDC down payment assistance is a forgivable second loan, not a grant.
Two programs, and the choice matters more than you think
| First Place | Next Step | |
|---|---|---|
| Who | First-time buyers and qualified Veterans | First-time and repeat buyers |
| Assistance | 4% forgivable second | 4% forgivable second |
| 1-family price limit | $566,354 non-targeted | $692,211 |
| Income, 1–2 people | $97,100 to $116,300 | $116,520 to $139,560 |
| Credit score | 640 | 640 |
The quiet detail: MHDC's limits sheet puts Next Step in the same column as targeted areas. So Next Step carries targeted-level limits everywhere in Missouri, with no targeted census tract required. Why that is the most useful fact on this site.
Targeted areas here are tracts, not counties
Missouri designates targeted areas by census tract, effective January 8, 2024, and no Missouri county is targeted in its entirety. You cannot answer the question from the county; lenders are pointed at the FFIEC geocoding map.
Which would be a nuisance, except that Next Step mostly removes the need to ask. How targeted tracts work here.
A correction worth reading before you plan around it
A great many Missouri pages still list an MHDC Mortgage Credit Certificate as something you can stack on top of your assistance. Cornerstone's approved lender guidance says the MCC program has been paused indefinitely effective January 1, 2026. MHDC's own homebuyer programs page now lists only First Place and Next Step.
And even when it ran, First Place could not be combined with one. The full correction.
Where to start
- The full eligibility test, including the three-pronged first-time rule that reads your tax returns.
- Income limits by area. Columbia has the highest in the state, above both Kansas City and St. Louis.
- Veterans, who are exempt from the first-time requirement entirely.
- Calculators, including what you would still owe if you left in year three.
Frequently asked questions
How much is Missouri down payment assistance?
MHDC provides a 100% forgivable second loan equal to 4% of the total mortgage amount, available on both the First Place and Next Step programs, to help with down payment and closing costs. MHDC down payment assistance is a forgivable second loan, not a grant, and it is only fully forgiven after the borrower has stayed in the home and maintained the original loan for ten years.
Is MHDC down payment assistance forgiven over 10 years?
Not on a straight line, which is how it is usually described. MHDC's operations manuals state that after year five the second mortgage begins diminishing by 1/60 every month until year 10. Nothing is forgiven during the first five years, so a borrower who sells in year four repays the entire 4%. The burn-down runs only across years five through ten.
Is MHDC down payment assistance a grant?
No, and MHDC says so directly. Its FAQ reads: is MHDC's Down Payment Assistance considered a grant? No, these are not grant funds. MHDC's DPA is a second loan for the amount of the DPA. Selling or refinancing during the ten-year period makes you responsible for repaying all or a portion of it, and a federal recapture tax may apply on disposal.
Can a repeat buyer get down payment assistance in Missouri?
Yes, through Next Step, which MHDC describes as giving potential first-time and repeat homebuyers outside the First Place income limits the edge they need. Next Step also carries higher income and purchase price limits than First Place. First Place itself is limited to first-time homebuyers and qualified Veterans. MHDC down payment assistance is a forgivable second loan, not a grant.
Does Missouri still have a Mortgage Credit Certificate program?
Not currently. Cornerstone's approved lender guidance states that effective January 1, 2026 the Mortgage Credit Certificate program will be paused indefinitely, and MHDC's own homebuyer programs page now lists only First Place and Next Step. Many third-party sites still present the MHDC MCC as available. Separately, the First Place Operations Manual states that First Place loans may not be used in conjunction with Mortgage Credit Certificates.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal or tax advice. MHDC program terms, income limits and purchase price limits are set by the Missouri Housing Development Commission and change; figures here carry the date we verified them against MHDC's published documents. MHDC down payment assistance is a forgivable second loan, not a grant, and selling or refinancing inside ten years can require repaying all or part of it. Loans are subject to borrower and property qualification.