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Begin with the structure of the assistance
The options described here pair an eligible first mortgage with a separate assistance loan. Some second mortgages have monthly payments. Others have no scheduled monthly payment and can be forgiven only after the borrower completes specified conditions.
Ask whether you will sign a note and a second mortgage, how repayment works and what happens when you sell or refinance. A program described as assistance is not automatically a grant. A deferred payment is also different from forgiveness.
There is more than one credit and assistance path
Selected FHA assistance options consider scores from 580 with automated underwriting approval. A separate manual-underwriting path begins at 600 and is limited to 3.5% assistance. Other assistance options begin at 660 and follow different housing-ratio, reserve and repayment rules.
The table keeps those choices separate. A lower score from one option cannot be paired with a larger assistance amount, a different forgiveness schedule or more flexible property rules from another. Both the first mortgage and the assistance must approve the same transaction.
What 3.5% and 5% assistance can mean
A qualifying 3.5% assistance option may supply the required FHA down payment, leaving none of that down payment to come from your own funds. A selected 5% option can also help with eligible closing expenses, but it has a repayable second mortgage and its own restrictions.
Neither percentage guarantees zero cash to close. Loan and settlement charges, prepaid expenses, reserves or costs paid before closing may remain. Ask for a complete cash calculation and confirm the basis used to calculate the assistance amount.
Forgiveness is a condition to complete
Some options require the borrower to request forgiveness after 36 consecutive on-time first-mortgage payments. A different option requires 60 consecutive on-time payments and a request. These schedules belong to different products and cannot be exchanged.
Read the signed assistance documents for what happens before forgiveness, including a sale, refinance, move or late payment. Ask how to request forgiveness and how you will know the lien has been addressed. Keep a copy of the agreement rather than relying on a marketing description later.
Income and property limits vary
Some standard site-built FHA assistance routes have no qualifying-income cap and allow eligible repeat buyers. Other options have an income limit, and a manufactured-home route has a separate higher score requirement and different repayment terms. Those distinctions can change which home and assistance option fit.
The FHA assistance choices shown here generally address eligible one- to two-unit primary-home purchases. Do not carry standard FHA’s broader property scope into the assistance program. Education or housing counseling, housing-payment history and documented savings may also be required.
Compare assistance with using your own funds
Assistance can preserve savings, but compare the full mortgage arrangement with an eligible purchase using your own funds or a permitted gift. Look at both loans’ payments, fees, total costs and future obligations. More help today can come with a different cost later.
Tell me whether your priority is preserving savings, limiting the monthly payment or moving on a particular timeline. I can help review the available options and the remaining cash needed. Current availability and your complete eligibility need confirmation before you rely on assistance in an offer.
Options and eligibility to compare
Compare the option that fits your credit, loan amount, property and documentation. Each has its own requirements, and the full application must qualify.
3.5% repayable assistance
Credit and underwriting: 580 or higher for the automated path; a separate manual path begins at 600. First and second loan qualification required.
Financing and amount: 3.5% of the lesser of price or appraised value; first mortgage up to 96.5% and combined financing up to 100%. Applicable FHA county limits.
Income and property: Eligible one- to two-unit primary-home purchase; no qualifying-income cap in this standard route; first-time and repeat buyers may qualify. Manufactured homes use a different option.
Benefits and conditions: Second mortgage has monthly payments and a defined repayment schedule; its payment counts in qualification. Housing counseling required. No resubordination; remaining costs and reserves need review.
3.5% conditional-forgiveness assistance
Credit and underwriting: 580 or higher with automated approval; separate manual path from 600.
Financing and amount: 3.5% of the lesser of price or appraised value; first mortgage up to 96.5%, combined up to 100%. Standard-balance FHA only for this description.
Income and property: Eligible one- to two-unit primary purchase; no qualifying-income cap in this standard route; first-time and repeat buyers may qualify. Manufactured homes excluded from this description.
Benefits and conditions: No scheduled second-mortgage payment. The borrower may request forgiveness after 36 consecutive on-time payments on the first mortgage; the assistance agreement controls eligibility and earlier repayment events. Counseling required; sale, refinance and other repayment provisions must be reviewed.
5% repayable assistance
Credit and underwriting: 580 or higher for every borrower; automated approval only.
Financing and amount: 5% of the lesser of price or appraised value; first mortgage up to 96.5%, combined up to 101.5%. Applicable FHA county limits.
Income and property: Eligible one- to two-unit primary purchase; no qualifying-income cap in this standard route. Manufactured homes use a different option.
Benefits and conditions: Repayable second with monthly payments included in qualification. No resubordination. Counseling required. No temporary 2-1 buydown in this option; cash to close may remain.
Manufactured-home assistance
Credit and underwriting: 620 or higher for every borrower; eligible manual review allowed.
Financing and amount: 3.5% assistance; first mortgage up to 96.5%, combined up to 100%; standard-balance financing.
Income and property: One-unit primary manufactured home; income limited to 80% of applicable area median income/low-income thresholds. Non-occupant co-borrowers must be relatives.
Benefits and conditions: Repayable second with monthly payments; counseling and payment-shock rules apply. No resubordination. Review buyer-history eligibility individually. This option does not include the 580 floor, no-income-cap feature or forgiveness.
Additional repayable assistance with reserve requirements
Credit and underwriting: 660 or higher; automated approval. Housing ratio maximum 35% at 660–699 and 42% at 700 or higher.
Financing and amount: 3.5% or 5% assistance with eligible FHA first financing up to 96.5%. 5% assistance is limited to conforming loan amounts.
Income and property: Eligible one- to two-unit primary purchase; no FHA assistance AMI cap in this option.
Benefits and conditions: Repayable second. Below 680, two months of housing-payment reserves are required and gifts cannot supply them; at 680 or higher, one month is required and gifts are permitted. Education required; no resubordination.
Additional conditional-forgiveness assistance
Credit and underwriting: 660 or higher; automated approval. Housing ratio maximum 35% at 660–699 and 42% at 700 or higher.
Financing and amount: 3.5% assistance with eligible FHA first financing up to 96.5%; conforming loan amounts only.
Income and property: Eligible one- to two-unit primary purchase; no FHA assistance AMI cap in this option.
Benefits and conditions: No scheduled second-loan payment; the borrower may request forgiveness after 60 consecutive on-time payments on the first mortgage; the assistance agreement controls eligibility and earlier repayment events. Below 680, two months of housing-payment reserves without gifts; at 680 or higher, one month with permitted gifts. Education required; no resubordination.
Compare the alternatives
Compare the first mortgage and a purchase funded without assistance.
What to gather for a useful conversation
Purchase price, county and property type
Income, credit and debt information
Savings you can use and savings you want to keep
Housing-payment history
Homebuyer education or counseling records if already completed
Frequently asked questions
Can I qualify for assistance with a 580 score?
Selected site-built FHA options may consider 580 with automated approval. Other criteria apply, and this does not establish eligibility for every assistance or manufactured-home option.
Is down payment assistance free money?
The options on this page are second mortgages. Some require repayment; others offer conditional forgiveness. Review the actual documents before treating any assistance as a grant.
Do I have to be a first-time buyer?
Not for every option. Several options allow eligible repeat buyers, while other program or property-specific requirements can differ.
What happens if I refinance?
The assistance may need to be repaid, and some options do not allow the second lien to remain behind a new first mortgage. Review the agreement before planning a refinance.
Will assistance cover every closing cost?
Not necessarily. The allowed uses, amount, other credits and transaction costs determine what remains due from you.
Related mortgage learning
What a Forgivable Down Payment Assistance Loan Means
Gift Funds vs. a Co-Borrower: What Changes in the File
Lender Credits vs. Financed Costs: What Changes the Real Cash Needed?
Related articles
How Much Cash Do You Need to Buy a Home?
Authoritative resources
Read the CFPB Loan Estimate explainer
CFPB explanation of piggyback second mortgages
Talk through your Ohio mortgage options
Call or text Gordon Hinchen at (440) 975-6216. Start with your plans and general questions. Use our secure application process for financial documents.
Educational information only. Not a commitment to lend or a guarantee of approval. Eligibility, availability and terms depend on the complete application, property and underwriting review. DRG Mortgage, LLC | NMLS #2657603 | Gordon Hinchen | NMLS #2751302 | Ohio residential mortgage brokerage services only | Equal Housing Opportunity.