The Quick Read: The minimum comes from the first mortgage program, not from the type of home. An FHA loan sets the floor at 3.5% of the lesser of price or appraised value, and the assistance option decides how much of that floor it covers. Property type changes which options you can use, not the percentage. Every file is underwritten individually, through wholesale lenders and subject to program guidelines.
Most buyers search this topic expecting a chart with a different percentage for a condo, a duplex and a single-family home. That chart doesn’t exist, and the reason matters. Once you see how the layers stack, you can predict your own answer before a loan officer runs your file.
Key takeaways
- The first lien sets the floor: FHA asks for 3.5%, HUD Section 184 asks for 2.25% (1.25% on small loans), and USDA asks for no down payment.
- Assistance is a percentage of price or value. Some options cover the whole FHA minimum. One covers only part of it.
- Property type limits which assistance option fits. Three- and four-unit homes work with only one of the options.
- The assistance is for an owner-occupied primary residence. Nobody has to be a first-time buyer.
- Two of the four shapes are loans, and the buyer should treat them that way.
What Is the Minimum Contribution, Exactly?
The minimum contribution is the share of the purchase the buyer must fund before the first mortgage covers the rest. On an FHA loan, the program calls it the minimum required investment. It equals 3.5% of the lesser of the price or the appraised value, with a representative credit score of 580 or higher. Scores from 500 to 579 call for 10%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The lender backs the first mortgage with 96.5% leverage. The buyer’s 3.5% fills the gap. The assistance options discussed below carry their own, higher credit floors, so the 580 line is not the one that governs once assistance enters the file. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The other two government first liens work differently:
- USDA: The USDA Single Family Housing Guaranteed Loan Program offers 100% financing for eligible rural primary residences. There is no minimum contribution. Household income is capped at 115% of area median, and the program is not limited to first-time buyers.
- HUD Section 184: The HUD Section 184 borrower page lists a 2.25% down payment on loans over $50,000 and 1.25% on loans under $50,000. Buyers also need cash for closing costs. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Notice what is missing from each rule. None of them says “one-unit” or “condo” next to a percentage. The percentage belongs to the program.
How Is the First Mortgage Underwritten, Step by Step?
Underwriting runs in a fixed order, and the property type shows up in only one step. Across the wholesale programs Lendmire places files with, the sequence looks the same whether the home is a townhouse or a duplex.
1. Pick the first lien. FHA, USDA or HUD-184. This sets the floor and the property rules.
2. Check the property. Is it a single-family home, a condo in an approved project, a planned unit development, or a small multi-unit building? This is where property type matters.
3. Choose the assistance shape. Grant, forgivable second, repayable second, or a refinance-cost second. The shape must fit both the first lien and the property.
4. Test the source. The lender confirms the money comes from a source the first-lien program accepts. Seller money cannot fill the FHA minimum. Closing-cost help from a seller is a separate matter.
5. Add up the liens. The first loan plus any second lien gives the combined loan-to-value. Lenders confirm that total sits inside the program limit.
6. Run the payment ratios. A repayable second carries a monthly payment, and that payment counts in your debt-to-income ratio. A grant or forgivable second adds no payment.
7. Close. Assistance is applied at closing, and a second lien appears on the Closing Disclosure as its own loan.
Step 5 is where buyers get surprised. FHA permits combined leverage above the 96.5% first-lien line when a qualifying second sits behind it. The exact ceiling depends on the program and the lender’s confirmation, so ask for it in writing before you commit to a home.
The step also points to a trap on USDA. The agency allows a soft second only when the guaranteed loan stays in first position. Its closing-the-loan chapter, which is still a draft, makes the same point and also bars cash back at closing beyond what you paid out of pocket. Assistance fills a gap. It does not put cash in your hand.
The Four Shapes and What Each One Covers
Four assistance structures are available through the wholesale programs Lendmire works with. Each is a percentage of price or value, and none promises a dollar amount. You can see the full menu on Lendmire’s down payment assistance programs page.
| Shape | Size | Repayment | Credit floor |
|---|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay | 620 |
| Forgivable second | 3.5% of lesser of price or value | Forgiven after 36 or 60 on-time payments | 640 |
| Repayable second | 3.5% or 5% of lesser of price or value | 30-year amortization, balloon in year 10 | 660 |
| Refinance-cost second | 1% to 3.5% of balance | Same terms as repayable | 660 |
A few mechanics sit behind the table.
The grant is released at closing. There is no lien, no payment and no interest. It pairs with FHA first liens only, and the first lien cannot be a high-balance loan. Eligibility requires household income at or below 140% of area median income, unless the buyer fits a qualifying category. Those categories include first responders, educators, medical workers, civil servants, military personnel, first-time buyers, and buyers in an underserved census tract. An HUD-approved homebuyer education course is required. The grant is not offered in Washington.
The forgivable second carries no interest and no monthly payment. It is forgiven after the first 36 or 60 on-time first-lien payments, with no delinquency of 90 days or more. It pairs with FHA, HUD-184 and USDA first liens. Manual underwriting is allowed.
The repayable second is a real loan. It bears interest, has a monthly payment, and comes due as a balloon in year 10. At 5%, the structure is the 3.5% minimum investment plus 1.5% toward closing costs and prepaid items. High-balance first liens are allowed, and manual underwriting is not.
The refinance-cost second applies to an FHA refinance, takes combined leverage to 104%, and is never used on a streamline refinance.
The second-lien options carry no income limit beyond USDA’s own on a USDA first lien. Nothing stacks. A buyer picks one assistance option, and a mortgage credit certificate is not permitted alongside the second-lien options.
Which Property Types Work With Which Option?
Property type decides which shapes are open to you. It doesn’t change the percentage of any shape. Here is how the options sort.
| Property | Grant | Forgivable | Repayable |
|---|---|---|---|
| Single-family, detached or attached | Yes | Yes | Yes |
| Condominium | FHA-approved project | Yes | Yes |
| Planned unit development | Yes | Yes | Yes |
| Two-unit (you live in one) | Yes | Yes | Yes |
| Three- or four-unit | Yes | No | No |
Owner-occupied primary residence only. Subject to program guidelines and full underwriting. Unique property types are excluded.
Four edge cases explain most of the confusion.
Condos need an approved project. For the grant, the condo must be in an FHA-approved project. That is a project test, not a down payment test. Buyers often fall in love with a unit and learn about the approval problem late. HUD’s condo search shows which projects are on the list, so check it before you make an offer.
Three- and four-unit buildings narrow the field. Only the grant covers 1-4 units. The forgivable and repayable seconds stop at two units. A buyer eyeing a fourplex to live in one unit and rent out the rest has one assistance path. The home is still a primary residence, and the other units don’t change that. Assistance for a purchase that is really a rental, a second home or a vacation home is not available.
Higher prices mean larger dollar contributions. The percentage is flat, so a pricier home means a larger absolute minimum. A flat-percentage grant scales with it. The dollar gap you must fund yourself scales too, whenever the option covers only part of the minimum. Current one-unit FHA limits run from $541,287 to $1,249,125 by county, and a loan above the local limit cannot use FHA at all. High-balance first liens are allowed with the repayable second, not with the grant or the forgivable second.
Manufactured housing is a footnote. It is eligible under some program matrices, with its own foundation and placement rules, and it adds no separate percentage.
Worked Examples in Percentages
These are modeled scenarios, not quotes. Each uses percentages of price so the logic is visible.
Scenario one: a condo with the 2% grant. Picture a renter buying a condo in an FHA-approved project. The FHA minimum is 3.5% of price. The 2% grant covers a little more than half. The buyer funds the remaining 1.5% of price from savings or a documented gift from an acceptable source, subject to lender review. Choosing the 3.5% grant would close the whole gap. The tradeoff is eligibility: the buyer must meet the income test or a qualifying category.
Scenario two: a single-family home with the forgivable second. Say a repeat buyer is moving up. A 3.5% forgivable second covers the full minimum investment. There is no payment on it. Staying current on the first mortgage for 36 or 60 months forgives it, depending on the term chosen. The cost of the shorter term versus the longer one is a question for the loan officer. The point is that the buyer’s cash need shrinks, not that the home gets cheaper.
Scenario three: a duplex with the repayable second. Consider an owner-occupant buying a two-unit building and living in one side. At 5%, the repayable second covers the 3.5% minimum plus 1.5% toward closing costs and prepaid items. The buyer takes on a second monthly payment, and a balloon arrives in year 10. A buyer expecting to sell or refinance before then may be comfortable with that. A buyer planning to stay a long time should model the balloon honestly.
Scenario four: a fourplex. With the buyer living in one unit, the grant is the only assistance path, since the second liens stop at two units. If the buyer fails both the income test and every category, the minimum comes from savings or an acceptable gift.
Where the General Rule Breaks
The “percentage belongs to the program” rule holds. Several things bend around it.
Government-entity assistance has paperwork. When a federal, state or local government entity supplies part of the FHA minimum, HUD Mortgagee Letter 19-06 requires the lender to document that entity’s authority. It also requires a legal opinion signed within two years of closing. A charity’s gift gets different treatment: the lender must confirm the provider is a genuine 501(c)(3) charitable organization. Neither route lowers the 3.5%. Both decide whether the money counts toward it.
HUD-184 has no assistance of its own. HUD’s Section 184 policy handbook says the program does not directly provide down payment help or grants. Tribes and other third parties supply it. The forgivable and repayable seconds can sit behind an HUD-184 first lien, so the borrower still has a path where it applies.
USDA assistance cannot ride through a refinance. USDA’s rules say an assistance second must be subordinated or paid off. It cannot be rolled into a new guaranteed refinance. Buyers who think they will refinance in a few years should plan for this.
Closing costs are a separate bucket. The FHA minimum covers the equity side. Closing costs and prepaids sit outside it, except where the 5% repayable structure folds in 1.5% for them. USDA allows eligible closing costs to be financed up to the appraised value, which can leave less to cover from savings.
Renovation adds rules. The second-lien options allow escrow holdbacks for minor non-structural repairs up to $5,000. The lender escrows 150% of the repair estimate, and the work must be completed within a timeframe that varies by file and lender.
The assistance source can disqualify you. FHA does not treat seller-funded or interested-party money as part of the minimum. History explains why. Past arrangements where sellers reimbursed a nonprofit were judged not to be true gifts. A source test failure at underwriting can leave a gap that cannot be filled at closing.
Does Anyone Have to Be a First-Time Buyer?
No. Repeat and move-up buyers qualify for every option in the network. The three-year first-time definition appears in only one place: it is one of the grant’s qualifying categories, alongside the public-service categories and the underserved-tract category. If your income is at or below 140% of area median income, you don’t need a category at all.
Buyers sometimes self-disqualify because they’ve owned before. Don’t. A buyer who sold a home five years ago and has rented since may qualify as a first-time buyer anyway, because the test looks back three years. A homemaker or single parent whose only past ownership was with a former spouse is also treated as a first-time buyer.
What the Decision Looks Like in Practice
For most buyers, the decision comes down to three questions asked in order.
1. Which shape fits my situation? A buyer with modest income or a public-service job may start with the grant, since nothing is repaid. A buyer above the income line with no qualifying category looks at the forgivable or repayable second, which carry no income test beyond USDA’s own on a USDA first lien.
2. Which shape fits my property? A duplex, a condo or a fourplex rules some options out. Check the table above before you fall in love with a building.
3. What am I willing to owe? A grant and a forgivable second leave no ongoing debt if you meet their conditions. The repayable second adds a payment and a balloon. The extra leverage may be worth it for a buyer with thin savings, but it is a loan.
A few things your file will need regardless: a full application, a credit score at or above the option’s floor, and an automated underwriting finding that supports the loan. The grant also requires the homebuyer education course. The borrower pays for it up front, and the cost is credited back at closing. The CFPB’s housing counselor directory lists HUD-approved counseling agencies, which is a useful starting point for course providers.
Key Terms Defined
Minimum required investment: The share of the purchase price, 3.5% on FHA, that the buyer’s own funds or an approved source must cover.
Combined loan-to-value: The first mortgage plus all second liens, divided by the property’s adjusted value.
Forgivable second: A second lien with no interest and no payment that is forgiven after a set number of on-time first-mortgage payments.
Balloon: The lump sum due at the end of a short term, which on the repayable second arrives in year 10.
Area median income: The midpoint household income for your county or metro area, which the grant option uses as its income test, generally set at 140% of area median unless a category applies.
Automated underwriting: The system that reviews a loan file and returns a finding on whether the loan fits program guidelines.
Frequently Asked Questions
Do I have to put any of my own money down?
It depends on the first lien and the assistance shape. USDA asks for no down payment. On FHA, a grant of 3.5% or a forgivable or repayable second at 3.5% can cover the whole minimum. The 2% grant covers only part of it, which leaves the rest to savings or an acceptable gift. Closing costs sit outside the minimum, except in the 5% repayable structure.
Does a duplex have a different minimum than a single-family home?
No. The FHA minimum is 3.5% for both. What changes is the dollar amount, because the price is higher, and the assistance options available. A two-unit home works with all three of the main shapes. A three- or four-unit home works with the grant only. In every case you must live in one unit as your primary residence.
Can a family member or the seller cover the minimum?
A family member’s gift can count, subject to lender documentation of the donor and the amount. Seller money cannot fill the FHA minimum, though seller concessions may help with closing costs. A gift is not another assistance program, but the lender must confirm the source and that no repayment is expected.
What happens to the second lien if I sell or refinance?
A repayable second must be paid off when you sell or refinance, and the balloon comes due in year 10 regardless. A forgivable second is forgiven after 36 or 60 on-time payments, so selling or refinancing before then may bring it due. On USDA, an assistance second cannot be rolled into a new guaranteed refinance. Ask your loan officer for the exact terms in writing.
Can I use assistance on a rental or a second home?
No. Assistance is for an owner-occupied primary residence only, never a second home, vacation home or rental. If you buy a two- to four-unit building and live in one unit, that is still a primary residence.
If you are buying a primary home and want to see whether a down payment assistance option fits your file, Lendmire can help you compare the grant, forgivable and repayable structures alongside an FHA, USDA or HUD-184 first mortgage. Lendmire is a mortgage broker licensed for consumer lending in 16 states, working through wholesale lenders, and the grant is not offered in Washington. Programs change, and every file is underwritten individually. This is not a commitment to lend.
Investors who want the broader program framework can review how DSCR loans work.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Down payment assistance options are arranged alongside FHA, USDA and HUD-184 first liens through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. USDA Single Family Housing Guaranteed Loan Program
This article is part of Lendmire’s down payment assistance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Down Payment Assistance While Still Owning a Home? · How Much Down Payment Assistance Can You Get? · Down Payment Assistance vs Gift Funds From Family
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.