How does DPA work?

The amount of down payment assistance received is based on a percentage of the total first mortgage loan amount. We can provide up to 5% assistance depending on the first mortgage loan product recommended by your lender.  The assistance may be used to fund up to 100% of the borrower’s required down payment and a portion of the closing costs.  The borrower cannot get cash back at closing with the exception any upfront expenses that were paid outside of closing such as escrow funds and appraisal fees.

The assistance provided with all government and Freddie Mac HFA Advantage conventional loans is in the form of a gift that does not have to be repaid.

The assistance provided with a Fannie Mae HFA Preferred conventional loan is in the form of a 7-year forgivable second mortgage, which forgives 1/84th of the assistance amount each full month the borrower lives in the property after the loan closes.  The borrower can receive 0%, 3.5%, 4.0%, or 5.0% of the total first mortgage loan amount in assistance funds in conjunction with this loan type.

See below for example:

Loan Type is: FHA (Government Product)Loan Type is: Fannie Mae HFA Preferred (Conventional Product)
Loan Amount is: $100,000Loan Amount is: $100,000
5% Assistance: $5,000 Gift5% Assistance: $5,000 2nd Mortgage
No repayment or liens for the $5,0002nd mortgage forgiven 1/84th a month over 7 years - no payments unless you sell or refinance within the 7 years.

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