Everything You Need to Know: City of Memphis Down Payment Assistance Programs

by Austin Rowe

Buying a home in Memphis? The City of Memphis's Division of Housing and Community Development offers several Down Payment Assistance (DPA) programs designed to help first-time homebuyers cover down payment and closing cost requirements. Here's a breakdown of what’s available and how you can qualify.

What the Program Offers

The city offers a range of DPA programs tailored to different needs:

Citywide DPA: Available to first-time homebuyers earning up to 80% of the Area Median Income (AMI), with the freedom to purchase anywhere within Memphis city limits. (The City of Memphis, kc.fcmpartners.com)
Memphis Housing Authority (MHA) DPA: Designed for current or recently displaced MHA residents, also capped at 80% AMI. (The City of Memphis, kc.fcmpartners.com)
Homebuyer Incentive Programs (HIP):
- HIP Citizens (HIPC): For buyers earning up to 200% AMI—but restricted to 15 designated neighborhoods in the city. The City of Memphis
- HIP Police (HIPP): For police officers (minimum one year of service), no income limit, citywide eligibility. The City of Memphis
- HIP Firemen (HIPF): For frontline firefighters with at least one year of service, no income limit, citywide eligibility. The City of Memphis
- HIP for Memphis-Shelby County Schools (HIPMSC): For school employees with at least two years of service, no income limit, and flexibility to purchase anywhere in the city. The City of Memphis

Program Details & Requirements

Here’s how the DPA programs work under the hood:

Loan Structure & Investment Requirements

Offers are in the form of Deferred Payment Loans (DPL). That means no monthly payments during a five-year affordability period, after which the lien is released if all conditions are met.
Buyers must invest at least 1% of the sales price toward the transaction—this may include down payment, appraisal, credit report, or inspection. Some programs like MHA and SHAPE require a minimum $100 contribution.

Funding Limits

The maximum assistance is capped at 10% of the sales price, with a $25,000 limit.

Property Eligibility & Inspections

Eligible properties must be single-family homes within city limits.
A passing property inspection is required according to Uniform Physical Conditions Standards (UPCS), covering health, safety, system life, lead paint, and more.

Income & Residency Conditions

Household income must not exceed AMI limits per program and is calculated using HUD standards with household “snapshots.”
Homebuyers must maintain the property as their primary residence for five years.
Failure to meet affordability terms requires repayment of the DPA award at a rate of 20% per year.

Financing & Counseling

Buyers must secure a 30-year fixed mortgage from a DPA-approved lender, with acceptable products including conventional, FHA, THDA, or VA loans. A credit score of at least 550 is required, along with maximum debt-to-income ratios (33% housing, 45% total debt).
A mandatory 8 hours of housing counseling from a HUD/THDA-approved agency is required before lending files are submitted.
Application submissions are accepted on a first-come, first-served basis.

Why This Matters for You

These DPA programs can significantly reduce upfront costs, making homeownership more accessible—especially in today's competitive market. As a broker, I can guide buyers through income qualification, lender selection, counseling requirements, and navigating the affordability term to maximize program benefits.