The Quick Read: Eligibility comes down to three things: how your household income compares with local median income, your credit score, and where the home sits. No single national rule governs it. The first mortgage follows its agency’s rules, and the assistance follows its own program’s rules. Across the wholesale programs Lendmire arranges, credit floors run from 620 to 660, income limits apply to only one of the four structures, and the home must be your primary residence.
What Is Down Payment Assistance, Really?
Down payment assistance is money that covers part of the cash you would otherwise bring to closing. It comes in a few shapes, and the shape decides what you owe later.
Most buyers assume it is a single product. It is not. Research summarized by WTOP found that most assistance comes from local governments, nonprofits, and state housing agencies, with no universal standard. Each provider writes its own income, credit, price, and location tests.
Lendmire is a mortgage broker. It arranges these options through wholesale lenders, subject to program guidelines and full underwriting. This article explains how that works for FHA, USDA, and HUD Section 184 first mortgages. For a broader look at what the brokerage offers, see its down payment assistance programs.
Key Takeaways
- Nobody has to be a first-time buyer. Repeat and move-up buyers qualify.
- Only the grant has an income test. The two second-lien options have none, apart from USDA’s own limit on a USDA loan.
- Credit floors rise with the structure: 620 for the grant, 640 for the forgivable second, 660 for the repayable second.
- The home must be your owner-occupied primary residence. That means not a second home and not a rental.
- Assistance cannot be stacked with another assistance program.
The Four Shapes, Side by Side
Start here, because the shape determines every requirement below it. All figures are percentages of price or value, never a dollar promise to a specific borrower.
| Factor | Grant | Forgivable second | Repayable second |
|---|---|---|---|
| Amount | 2% or 3.5% of price | 3.5% of price or value | 3.5% or 5% of price or value |
| What you owe | Nothing to repay | Forgiven over time | Loan, repaid |
| Credit floor | 620 | 640 | 660 |
| Income test | 140% of area median, or a category | None | None |
| Pairs with | FHA only | FHA, USDA, HUD-184 | FHA, USDA, HUD-184 |
| Units | 1-4 | 1-2 | 1-2 |
A fourth shape exists for refinancing. It is a second lien worth 1% to 3.5% of the loan balance, toward the closing costs of an FHA refinance. It carries a 660 credit floor.
The lesser of price or appraised value sets the base for the seconds. If the home appraises below the price, the assistance shrinks with it.
How Do Income Limits Work?
Income limits apply to the grant and to any USDA first mortgage. They do not apply to the forgivable or repayable seconds on an FHA or HUD-184 loan.
The grant’s test. Household income must be at or below 140% of the area median income. Area median income is the midpoint household income for your county, and it changes by place. A given household can sit under the cap in one county and over it in the next.
Here is the part buyers miss. The 140% test is waived if you fall into a qualifying category. Those categories are:
- First responders, current, former, or entering service
- Educators
- Medical personnel, including nurses, doctors, and hospital workers
- Civil servants at the federal, state, or local level
- Military personnel, including retired and volunteer
- First-time homebuyers, defined as no ownership interest in a residential property in the prior three years
- Buyers purchasing in an underserved census tract
Meeting any one is enough. So a repeat buyer who earns well above the median can still qualify as a teacher or a nurse. A high earner outside every category, in a tract that isn’t underserved, is the buyer the income test actually screens out.
The second liens. The forgivable and repayable seconds carry no income limit. That surprises people who assume assistance is only for low earners.
USDA’s limit is separate. On a USDA loan, the buyer must meet the program’s own income cap. USDA’s Single Family Housing Guaranteed Loan Program sets that cap at 115% of median household income and requires that you occupy the home as your primary residence. The program is also not limited to first-time buyers.
What Counts as Household Income
For USDA, income is measured across everyone who will live in the home, not just the people on the loan. The regulation at 7 CFR Part 3555 defines adjusted annual income to cover all household members. A buyer with modest personal income can still land over the limit if a working adult in the household pushes the total up.
USDA also publishes county limits by household size, and the figure steps up for larger households. The numbers change each year, so check the current table for your county rather than relying on a remembered figure.
What Credit Score Do You Need?
Credit works in layers, and the highest layer wins. Your score must clear the assistance floor, the first-mortgage floor, and the lender’s own overlay.
For the options Lendmire arranges, the floors are:
- Grant: 620, using the lowest representative score among all borrowers on the loan.
- Forgivable second: 640, or 660 on a blended basis.
- Repayable second: 660, or 670 blended.
- Refinance-cost second: 660, or 670 blended.
Why the number is higher than FHA’s. FHA’s minimum required investment is 3.5% of the lesser of price or appraised value for a representative score of 580 or higher. Scores from 500 to 579 generally require 10%. Those tiers are widely reported, and you should confirm them in the current FHA handbook. But the assistance options sit above that floor with their own minimums. A 590 score can work for a bare FHA loan and still miss every assistance option.
What a blended score is. On the second-lien options, a lower-scoring co-borrower’s score can be averaged in. This works only when the primary wage earner earns at least 60% of household income and holds the higher score. The minimums become 660 for the forgivable second and 670 for the repayable one, and an automated underwriting approval is required.
Other file requirements. The forgivable second allows manual underwriting. The repayable second does not. For manual FHA underwriting, the standard ratios are 31% housing and 43% total debt, and files that get an automated approval commonly allow more. The assistance options follow the automated finding.
A lender can also set a floor above the program’s. If you are close to a cutoff, ask the loan officer which score they will use and whether any overlay applies.
How Does Location Change the Answer?
Location affects which first mortgage you can use, which assistance you can use, and where the money is available at all.
USDA requires a rural area. The property must sit in an eligible rural area, per the USDA program page. A house can satisfy every assistance rule and still fail on geography.
FHA limits vary by county. The first mortgage must fit the county’s FHA loan limit. For one-unit homes in 2026, limits run from $541,287 to $1,249,125 depending on the county. The grant cannot pair with a high-balance first lien. The repayable second can.
HUD-184 follows designated areas. Section 184 loans serve enrolled tribal members, tribes, and tribally designated housing entities, and they apply in approved areas. A 2025 rule removed non-permanent resident aliens from eligibility. Section 184 has no listed maximum income limit, but HUD’s program guidance says the borrower must still qualify on income and credit. Loan limits vary by county.
State rules. Consumer lending through Lendmire is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. The grant is not offered in Washington.
Local programs differ. Many public programs cap the amount they give, and some add a recapture period. State housing finance agencies publish their own tiers, and the structures vary from repayable seconds to deferred or forgivable seconds and grants. Treat any one state’s figure as that state’s, not a national norm.
How a File Moves, Step by Step
Here is the order the pieces fall into on a real file.
1. Pick the first mortgage. FHA, USDA, or HUD-184. Its agency sets the basics: loan limits, credit, debt ratios, rural area, or tribal enrollment.
2. Match the assistance to the first lien. The grant pairs only with FHA first liens, including FHA 203(b), repair escrow, and the Limited and Standard 203(k). The forgivable and repayable seconds also pair with USDA and HUD-184.
3. Classify the assistance. A grant leaves no lien. A second lien is recorded against the home, so it counts as secondary financing.
4. Disclose it at application. FHA requires the second lien to be disclosed up front.
5. Underwrite both pieces. The first mortgage and the assistance each get reviewed. A repayable second adds a monthly payment to your debt ratios. A forgivable or deferred structure usually does not, though it still creates a lien.
6. Complete the education course, if required. The grant requires an HUD-approved homebuyer education course. You pay up front, and the cost is credited back at closing. The second-lien options have no counseling requirement.
7. Close. FHA does not allow cash back to the borrower from secondary financing.
If you want independent advice before you commit, HUD-approved housing counselors are available, often at little or no cost.
The Lien Rule That Trips People Up
A forgivable loan is not a gift. FHA treats any financing that creates a lien on the property as secondary financing, even when there are no payments and the debt is forgivable. Gift and grant rules do not apply to it. That rule sits in the secondary-financing section of HUD Handbook 4000.1, the FHA policy handbook.
That’s why the grant matters structurally. It leaves no lien, no payment, and no interest. It is released at closing toward your minimum required investment, and there is nothing to repay.
FHA will insure a first mortgage behind a governmental second lien under conditions. The second lien must be disclosed at application. Its costs cannot be financed into the first mortgage. Its payments count in the total mortgage payment. No cash comes back to the borrower. And there can be no balloon within 10 years, with a carve-out for certain Federal Home Loan Bank set-aside programs.
Notice the tension. The repayable second Lendmire arranges has a balloon in year 10, which sits at the line of that rule. That’s one reason a second lien is a loan to be understood, not a bonus to be assumed.
What Do You Owe After Closing?
It depends entirely on the shape.
Grant. Nothing. No payment, no interest, no lien.
Forgivable second. No interest and no monthly payment. It is forgiven after your first 36 or 60 on-time first-mortgage payments, depending on the version, as long as you never hit a 90-day or worse delinquency. Sell or refinance early, and a balance may come due. Treat that as a loan, because until forgiveness it is one.
Repayable second. This is a real second loan. It bears interest, requires a monthly payment, amortizes over 30 years, and comes due in a balloon in year 10. It has its own disclosures, separate from the first mortgage, including a balloon disclosure. Plan the year-10 exit before you sign: a refinance, a sale, or a payoff.
The Urban Institute notes that assistance structured as a grant or forgiven over time can lower payments and build equity, because you borrow less on the first mortgage. The tradeoff is that the repayable version raises your monthly obligations instead.
Where the General Rules Break
A few exceptions come up often enough to name.
You own now, or you owned before. Fine. No option requires a first-time buyer. The three-year definition is only one of the grant’s qualifying categories.
You earn too much. If you are in a qualifying category, the grant’s income test does not apply. If you are not, the second liens have no income limit. On USDA, the cap applies regardless.
You want to buy a rental or second home. Assistance is for owner-occupied primary residences only.
You want two programs. No option combines with another assistance program. A mortgage credit certificate is also not permitted with the second-lien options.
Your property is unusual. The grant covers 1-4 unit primary residences, FHA-approved condominiums, and planned unit developments. The seconds cover single-family detached or attached homes, condos, and PUDs. Unique property types are excluded.
Your home needs repairs. On the second-lien options, minor non-structural repairs up to $5,000 can be held in escrow at 150% of the estimate and completed after closing, with the timeline varying by file and lender. A limited 203(k) first lien can carry renovation up to $75,000.
Your score is just below a cutoff. Check blended scoring if there’s a co-borrower. Otherwise, shifting to a structure with a lower floor may work. The grant, at 620, has the lowest.
Which Shape Fits Which Buyer?
Honest advice: match the structure to your situation, not to the largest percentage.
- A renter with thin savings and a 620 score is the grant’s natural fit, since nothing is owed afterward. Education is required, and a qualifying category or the 140% test must hold.
- A teacher or nurse buying a move-up home can use the grant’s category route even at a higher income. They get nothing to repay, as long as the first lien is FHA.
- A buyer in a rural area using USDA looks at the forgivable or repayable second. The income cap on the USDA loan applies, and the assistance adds no income test of its own.
- A buyer who needs closing-cost help too looks at the repayable second at 5%, which covers the 3.5% minimum investment plus 1.5% toward closing costs and prepaids.
- A homeowner with an FHA loan who wants to refinance looks at the refinance-cost second, which covers closing costs on an FHA 203(b) refinance up to 104% combined leverage.
Key Terms Defined
Area median income: The midpoint household income for a county, used to set income limits.
Combined loan-to-value: The first mortgage plus all second liens, divided by the home’s value.
Minimum required investment: The portion of the price an FHA buyer must put in, which is 3.5% for scores of 580 and up.
Balloon payment: A large lump-sum balance due at the end of a set period, before the loan fully pays off.
Representative score: The credit score a lender uses for qualification, typically the middle of three bureau scores, and the lowest across borrowers on the file.
Secondary financing: Any loan secured by a lien behind the first mortgage.
Frequently Asked Questions
Do I need to be a first-time homebuyer?
No. None of the options Lendmire arranges requires it. Repeat and move-up buyers qualify. For the grant, being a first-time buyer is just one of several qualifying categories, alongside public-service and medical roles and underserved census tracts.
Is there an income limit on down payment assistance?
Only on the grant, and even there it has exits. The grant requires household income at or below 140% of area median income unless you fit a qualifying category. The forgivable and repayable seconds carry no income limit, except USDA’s own cap if you use a USDA first mortgage.
What credit score do I need?
It depends on the shape. The grant starts at 620, the forgivable second at 640, and the repayable second at 660, subject to lender guidelines. Blended scores raise those to 660 and 670 for the second liens. A lender may also apply its own higher floor.
Can I use assistance on a rental or second home?
No. Every option requires an owner-occupied primary residence. Second homes, vacation homes, and investment properties are excluded.
Can I combine two assistance programs?
No. Nothing stacks with another assistance program. The second-lien options also cannot be combined with a mortgage credit certificate.
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. Programs change, and every file is underwritten individually. This is information only and not a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
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. WTOP
2. HUD
3. USDA RD 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: How Income Limits Cut Off Down Payment Assistance for High Earners · How Down Payment Assistance Compares to One More Year of Rent · Does Down Payment Assistance Raise Your Monthly Payment?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.