How does DPA work?

For our DPA on conventional loans, we have multiple options in the form of a gift, forgivable 2^nd mortgage, and amortizing 2^nd mortgage.

Freddie Mac HFA Advantage:

• Option 1A – Gift: 3% Down Payment Assistance (1.5% Mortgage Company compensation a/k/a Service Release Premium (SRP))
• Option 1B – Gift: 0%, 3.5%, 4.0%, or 5.0% Down Payment Assistance (2.5% Mortgage Company compensation a/k/a Service Released Premium (SRP)).

Freddie Mac Options 1A & 1B are true gifts with no repayment required or lien on the property. They are based on a percentage of the Total Loan Amount and can be used to fund up to 100% of the Borrower’s cash requirement to close, including the down payment or voluntary down payment, closing costs, pre-paid items and other related Mortgage Loan fees and expenses.

Fannie Mae HFA Preferred:

• Option 1A – Forgivable 2^nd Mortgage: 3% Down Payment Assistance (1.5% Mortgage Company compensation a/k/a Service Release Premium (SRP))
• Option 1B – Forgivable 2^nd Mortgage: 0%, 3.5%, 4.0%, or 5.0% Down Payment Assistance (2.5% Mortgage Company compensation a/k/a Service Released Premium (SRP)).

Fannie Mae Options 1A & 1B are forgivable 2^nd mortgages with 0% interest, forgiven monthly over 7 years. They are based on a percentage of the Total Loan Amount and can be used to fund up to 100% of the Borrower’s cash requirement to close, including the down payment or voluntary down payment, closing costs, pre-paid items and other related Mortgage Loan fees and expenses.

Freddie Mac HFA Advantage AND Fannie Mae HFA Preferred:

• Option 2 – Amortizing 2^nd Mortgage: 5% Down Payment Assistance (2.5% Mortgage Company compensation a/k/a Service Released Premium (SRP)).
  • 0% Fixed Interest Rate on 2^nd Mtg.
  • 10 Year Loan Term

Freddie/Fannie Option 2 is an amortizing 2^nd mortgage. It is based on a percentage of the Total Loan Amount and can be used to fund up to 100% of the Borrower’s cash requirement to close, including the down payment or voluntary down payment, closing costs, pre-paid items and other related Mortgage Loan fees and expenses.

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