Down Payment Assistance comes in many different forms. Most are issued by state or local government agencies, so they are often state or even city specific. The types of support they offer and how, or if, you'll repay that support is one key differentiator between the types of programs.
One of the most common misconceptions of down payment assistance is that you must be a first-time homebuyer or have perfect credit. While this is true on a few programs, it's not true for most. Seasoned homebuyers are welcome to use most down payment assistance programs but the program may have a restriction on owning more than one residence. Perfect credit also isn't a must, as many programs go as low as 620, with a few even lower.
Down Payment Assistance typically isn't a different loan type. For example, the first mortgage might be an FHA or Conventional loan, while the assistance is coming in the form of a second mortgage or a grant. Down Payment Assistance tends to come in three forms.
A Grant is a type of Down Payment Assistance which is typically a lump sum or a percentage of the first mortgage amount. The Grant may be forgivable by the lender if you stay in home for a specific period of time, or maybe repayable upon the sale of the home.
A "Silent" 2nd Mortgage is another type of Down Payment Assistance. The amount of the assistance is a percentage of the first mortgage, and a 2nd deed of trust is filed against the property reflecting the assistance. The assistance in a "silent" 2nd Mortgage has no monthly payments and may be forgiven by the lender if you stay in the home a specific period of time, commonly 3-5 years.
A 2nd Mortgage is another type of Down Payment Assistance. This is similar to above. However, the 2nd Mortgage will typically have some monthly payment attached and maybe amortized over a shorter term than the first mortgage. It's also typically not forgivable.
Down Payment Assistance is a great way to help homebuyers purchase a property for less money down. However Down Payment Assistance first mortgages typically have higher interest rates than comparable non-down payment assistance loans, and might have more restrictive qualifications or income limits, which don't apply to traditional mortgage loans.