How does DPA work?

The down payment assistance is based on a percentage of the total first mortgage loan amount.  The type of assistance provided depends upon the conventional first mortgage loan type as shown below:

  • Freddie Mac HFA Advantage – amount of assistance is 0%, 3.5%, or 4.0% of the total first mortgage loan amount, determined by the participating lender.  The assistance is provided to the borrower in the form of a gift.
  • Fannie Mae HFA Preferred – amount of assistance is 0%, 3.5%, 4.0%, or 5.0% of the total first mortgage loan amount, determined by the participating lender.  The assistance is provided to the borrower in the form of a 7-year forgivable second mortgage.  The second mortgage loan principal will be forgiven 1/84th each month, beginning with the first full month after closing.  There is no forgiveness for partial months.  The outstanding principal of the second mortgage loan will be due and payable in any of the following instances:
    • The sale, disposition, or transfer of the property
    • The refinancing or payment in full of the first mortgage loan
    • Failure to occupy the property as principal residence for a period of more than sixty (60) days
    • Upon acceleration of the first mortgage loan or second mortgage loan for any reason
  • The assistance funds may be used to fund up to 100% of the borrower’s cash requirement to close, including the down payment, closing costs, pre-paid items, single or split MI fees, and other related mortgage loan fees and expenses.  No portion of the assistance funds can be paid to the borrower unless the borrower is being reimbursed for his/her earnest money deposit and pre-paid expenses, to the extent the minimum borrower contribution has been satisfied.  Under the rate-term refinance option, any funds above the amount needed to pay the borrower’s loan-related costs must be used to reduce the principal amount of the first mortgage loan.
  • REI will table fund the assistance funds at closing

Please see the program summary via the link at the bottom of the page for more detailed information.

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