The Quick Read: Yes, but mostly through your cash at closing and your monthly budget, not through the first mortgage’s own charges. A grant adds no payment and no lien. A forgivable second adds no payment but sits on the home as a lien until it is forgiven. A repayable second is a real loan with a monthly payment that counts against your qualifying ratios.
The first mortgage keeps its own costs either way. On an FHA loan, the mortgage insurance still applies. Assistance changes how much cash you bring, not whether those charges exist.
The Four Shapes and What Each One Costs
Four shapes of assistance exist across the wholesale programs Lendmire places files with: a grant, a forgivable second lien, a repayable second lien, and a refinance-cost second lien. Each one costs you differently. That difference is the real answer to the title question.
Across the lenders Lendmire works with, these are the shapes buyers see most. Every figure below is a percentage of price or value, never a dollar promise. Terms are subject to program guidelines and full underwriting.
| Shape | Assistance size | Monthly payment | Lien on the home |
|---|---|---|---|
| Grant | 2% or 3.5% of price | None | None |
| Forgivable second | 3.5% of price or value | None | Yes, until forgiven |
| Repayable second | 3.5% or 5% of price or value | Yes | Yes, 10-year balloon |
| Refinance-cost second | 1% to 3.5% of balance | Yes | Yes, 10-year balloon |
Here is what each shape means for your cost.
The grant. Nothing to repay. It is released at closing, with no lien, no payment and no interest. It works toward the FHA minimum investment on an FHA first lien. The credit floor is 620. Eligibility is household income at or below 140% of area median income, unless you fall into a qualifying category, such as a first responder, educator, medical worker, civil servant, military member, first-time buyer, or a buyer in an underserved census tract. A homebuyer education course is required. The grant is not offered in Washington.
The forgivable second. This is 3.5% of the lesser of price or appraised value. It carries no interest and no payment. It is forgiven after 36 or 60 on-time first-lien payments, depending on the version. The credit floor is 640. It pairs with FHA, USDA and HUD-184 first liens.
The repayable second. This is 3.5% or 5%. It is a second loan. It is interest-bearing and carries a monthly payment. It amortizes over 30 years, with a balloon due in year 10. At 5%, it covers the 3.5% minimum investment plus 1.5% toward closing costs and prepaid items. The credit floor is 660.
The refinance-cost second. This is a narrower tool. It covers 1% to 3.5% of the balance toward closing costs on an FHA refinance. Combined leverage can reach 104%. It carries the same repayment terms as the repayable second.
Nobody has to be a first-time buyer for any of this. Repeat and move-up buyers qualify. The second-lien options carry no income limit beyond USDA’s own on a USDA first lien. And the home must be your owner-occupied primary residence. A rental or second home does not qualify.
If you want the broader menu first, Lendmire’s overview of down payment assistance programs lays out how these options fit together.
Does Assistance Change the First Mortgage’s Own Charges?
No. The first mortgage’s insurance or guarantee costs stay in place whether or not you take assistance. What changes is the cash you need and, with a second lien, the debt on the home.
Start with FHA. HUD’s Mortgagee Letter 2023-05 sets the upfront mortgage insurance premium as a percentage of the base loan amount. Most buyers finance it into the loan. Annual insurance is set by loan term, loan-to-value and base loan amount. Assistance leaves both premiums in place.
Here is the tier effect. The FHA minimum investment is 3.5%, so the first lien sits at 96.5% of value. On a 30-year loan above 95% loan-to-value at or below the $726,200 base-loan line, annual insurance is 0.55% of the balance. Above 90% loan-to-value, it runs for the life of the loan. Assistance that covers your minimum investment keeps you in that high-leverage tier. This is how the tiers work, not a promise about any one file. A buyer who puts more of their own money down could land in a lower tier. That is a real tradeoff to weigh.
USDA works differently. It asks for no down payment at all, so assistance there often goes toward closing costs. USDA allows junior liens as long as they do not interfere with repayment, were considered in underwriting, and are for an authorized purpose. The guaranteed loan must stay in first-lien position. The guarantee fee can be financed. The maximum loan is 100% of appraised value plus that fee.
HUD-184 (the Indian Home Loan Guarantee) has its own upfront fee and no annual insurance. A Federal Register notice raises that upfront guarantee fee from 1.00% to 1.50% for new commitments and keeps the annual fee at zero. Older HUD pages may still show the lower figure. Tribal or state housing finance agency help may be available as well, and the lender confirms how it is treated under HUD’s Section 184 guidance.
How Does a Repayable Second Change Qualifying?
A repayable second raises your monthly obligation, so it can lower how much house you qualify for. A grant and a forgivable second usually do not, because they carry no payment.
This is the biggest cost channel in practice. USDA’s underwriting rules count subordinate liens in the monthly housing expense. The housing-ratio standard there is 29%. USDA’s housing-ratio guidance is explicit that subordinate liens belong in that number. FHA’s manual-underwriting ratios are 31/43, though approvals through automated underwriting often allow more. The assistance options follow the automated finding.
A forgivable second has no required payment, so it adds nothing to the ratio. A repayable second does. That is why the repayable option has a higher credit floor (660) and does not allow manual underwriting.
Here is a thinking-out-loud point. Many buyers assume the biggest assistance percentage is the best deal. It may not be. A 5% repayable second that covers closing costs might push your ratios past what the first lien can bear. A 3.5% forgivable second might cover the minimum investment and leave your payment untouched. The larger number is not automatically the cheaper path.
What Happens If You Sell or Refinance Early?
Early exits are where assistance costs surface. A grant has no strings. A second lien has to be dealt with at sale or refinance.
Grant. Nothing to repay, so a sale or refinance has no assistance payoff.
Forgivable second. Forgiveness depends on making the first 36 or 60 on-time payments, with no 90-day-or-greater delinquency. Sell or refinance before that point and the lien comes due, at least in part. After the forgiveness date, the lien is gone.
Repayable second. It comes out of your sale proceeds. If you are still in the home in year 10, the balloon is due. Plan your hold period around that date.
Refinancing. A second lien has to be paid off or subordinated when the first mortgage changes. USDA, for one, says assistance loans cannot be rolled into a new guaranteed refinance. They have to be subordinated or paid in full. The refinance-cost second is not available to refinance an existing assistance loan.
Public programs often use these structures too. The Urban Institute finds that most assistance programs are second mortgages rather than grants, and that many defer or forgive the payment. That is the same pattern you see here.
The break-even logic is simple. Ask how long you expect to stay. A short hold favors a grant, because nothing is owed on exit. A long hold favors a forgivable second, because forgiveness completes. A hold that runs near year 10 on a repayable second is the case that needs a real plan.
A Buyer Scenario, No Dollars
Picture a renter buying a first home with thin savings. She plans to stay about seven years, and her income sits well below the area median. On an FHA first lien, the grant fits her best. It covers part of the 3.5% minimum, leaves no payment and no lien, and she can sell or refinance without an assistance payoff.
Now change the buyer. Say a repeat buyer is moving up, has a stable income above the 140% test, and does not fall into any category. The grant is off the table for him. The forgivable second is a strong fit if his ratios are tight, since it adds no payment. If he needs closing-cost help too, the repayable second at 5% covers it, but he takes on a monthly payment and a year-10 balloon. He should check that his ratios still work with that payment counted.
One more case. A teacher buying with a USDA first lien does not need the grant, because USDA’s own income limits apply and the grant pairs with FHA only. A forgivable or repayable second can sit behind the USDA loan.
Which Shape Fits Which Buyer?
| Buyer situation | Shape that tends to fit |
|---|---|
| Tight cash, plans to move in a few years | Grant |
| Tight ratios, plans to stay 3 to 5+ years | Forgivable second |
| Needs closing-cost help, strong ratios | Repayable second at 5% |
| Already owns, wants refinance-cost help | Refinance-cost second |
| Uses USDA or HUD-184 first lien | Forgivable or repayable second |
These are tendencies, not approvals. Lenders review credit, income, property and reserves on every file. Assistance does not stack with another assistance program, and a mortgage credit certificate is not permitted with the second-lien options.
The property matters too. The grant covers one- to four-unit primary residences, FHA-approved condominiums and PUDs. The second-lien options cover single-family detached or attached homes, condominiums and PUDs. Minor non-structural repairs of up to $5,000 can be escrowed at 150% of the estimate and finished within 90 days.
Key Terms Defined
Minimum required investment: The share of price or value an FHA buyer must put in, 3.5% on most files.
Second lien: A separate loan secured behind the first mortgage, with its own note and its own disclosure.
Forgivable: A second lien that is cancelled after a set number of on-time first-lien payments.
Balloon: A lump-sum payoff of the remaining balance due at a set date, year 10 on the repayable options.
Combined loan-to-value: The first and second liens added together as a share of home value.
Blended score: A credit score averaged across co-borrowers when the main earner has the higher score and earns at least 60% of household income. It applies to the second-lien options.
What the File Needs
The file needs less than most buyers expect, but each piece matters. Expect a full application and an automated underwriting finding. For the grant, expect a homebuyer education course. You pay for it up front, and the cost is credited back at closing. For a second lien, expect a separate disclosure for that loan, and for the repayable version a balloon disclosure as well. Credit scores must clear the floor for the shape you choose.
Common mistakes are easy to avoid:
- Assuming a forgivable second is not a lien. It is, until forgiven.
- Choosing the biggest percentage without checking how the payment affects ratios.
- Ignoring the year-10 balloon on the repayable second.
- Applying for a second home or rental. Assistance is for primary residences only.
- Assuming you can stack programs. Each option stands on its own: the grant, the forgivable second and the repayable second are separate choices, and none combines with another assistance program or a mortgage credit certificate (MCC).
Next Step
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 arranging consumer financing through wholesale lenders in 16 states, subject to program guidelines and full underwriting. This is not a commitment to lend.
Frequently Asked Questions
Will a grant raise my monthly payment?
No. A grant carries no lien, no interest and no payment. It reduces the cash you bring to closing. Your first mortgage payment stays what the first lien produces, including FHA mortgage insurance. The grant is limited to FHA first liens and is not offered in Washington.
Does a forgivable second count against my debt ratios?
Generally not, because it carries no monthly payment while it is outstanding. It still sits on the home as a lien until forgiven after 36 or 60 on-time first-lien payments. A repayable second is different. Its payment counts in your ratios, and on USDA files the housing-ratio rules name subordinate liens specifically.
Do I have to be a first-time buyer?
No. None of the options requires it. Repeat and move-up buyers qualify. The first-time definition is only one of the grant’s qualifying categories. The home must be your owner-occupied primary residence.
What if I sell before the second lien is forgiven?
The lien comes due, at least in part, because forgiveness depends on completing the on-time payments. Selling or refinancing early triggers a payoff or a subordination step. A repayable second always comes out of proceeds at sale. Plan your expected hold period before you choose a shape.
Can I use assistance on a rental or second home?
No. Assistance is for an owner-occupied primary residence only.
Investors who want the broader program framework can review how DSCR loans work.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving home buyers in 16 states. Down payment assistance programs are arranged with FHA, USDA and HUD-184 first liens through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD Mortgagee Letter 2023-05
3. Urban Institute on down payment assistance
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 A Repeat Buyer Get Down Payment Assistance On A Primary Home? · FHA Loan CLTV and Second Lien Rules With Down Payment Assistance · How to Qualify for Down Payment Assistance When You’re Self-Employed
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.