The Quick Read: Assistance has no fixed dollar value, because it is sized as a percentage of the price. On an FHA purchase, a 3.5% grant or forgivable second can cover the entire minimum cash investment. A 2% grant covers a little over half of it. A 5% repayable second also reaches into closing costs. Every option still has to fit your credit, your first mortgage, and your monthly budget.
Key Takeaways
- Assistance is a percentage of price or value, so the same home gets a different answer under each option.
- A grant has nothing to repay. A forgivable second is forgiven over time. A repayable second is a real loan with a monthly payment.
- You do not have to be a first-time buyer for any of the options.
- Closing costs, prepaid items, and cash reserves are separate from the down payment, and assistance only covers some of them.
- Assistance is for the home you live in. It is not available for a second home or a rental.
What “Cash Down Payment Assistance” Means
It is money added to your purchase at closing, paid through the settlement, never handed to you. It fills part of the cash your first mortgage requires. Across the wholesale programs Lendmire arranges files with, it comes in four shapes, and each one sits on top of a government-backed first mortgage. Lendmire’s down payment assistance programs page lays out the full menu.
Here is the one-line version of each:
| Shape | Size | What you owe | Credit floor |
|---|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay | 620 |
| Forgivable second | 3.5% of lesser of price or value | Nothing if you stay current | 640 |
| Repayable second | 3.5% or 5% of lesser of price or value | Payments, balloon in year 10 | 660 |
| Refinance-cost second | 1% to 3.5% of balance | Same as repayable | 660 |
The fourth shape only applies to an FHA refinance, so it sits outside a home purchase. The first three are the ones that matter for a $300,000 home.
Nobody has to be a first-time buyer. A repeat buyer moving up qualifies. The home must be your primary residence, and that rule has no exceptions for vacation homes or rentals.
The Cash a Purchase Actually Requires
A $300,000 purchase needs several buckets of cash. Assistance fills some of them, not all.
| Cash bucket | Can assistance apply? |
|---|---|
| Minimum required investment | Yes, under all three purchase options |
| Closing costs and prepaids | Only with the 5% repayable second |
| Reserves after closing | No |
| Homebuyer education cost | Credited back at closing on the grant |
The FHA minimum required investment is 3.5% of the lesser of price or appraised value. That figure is the floor for a credit score of 580 or higher. HUD’s FHA Resource Center describes the same 3.5% minimum. Scores from 500 to 579 need 10%. The assistance options carry their own higher credit floors, so that lower tier does not apply to them. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
FHA also charges an upfront mortgage insurance premium, and you can finance it into the loan. Annual mortgage insurance is added on top, and its tier depends on your loan size and leverage. A qualified local lender or insurance professional can confirm the exact premium amounts for your situation.
How the First Lien and the Assistance Are Underwritten
Think of it as two files that must agree with each other. Here is the order lenders work in.
1. Pick the first mortgage. FHA, USDA, or HUD-184 sets the base cash requirement. The grant pairs only with FHA. The forgivable and repayable seconds also pair with USDA and HUD-184.
2. Match the option to your profile. Credit score, income, and unit count steer you toward one shape.
3. Run the automated underwriting check. The assistance options follow the finding on the first lien. The repayable second does not allow manual underwriting. The forgivable second does.
4. Count the second payment. A repayable second adds a monthly payment that goes into your debt ratios. A grant or a forgivable second adds none.
5. Complete the program steps. The grant requires an HUD-approved homebuyer education course. You pay for it up front, and the cost is credited back at closing.
One point surprises people. If a program records the money as a lien, FHA treats it as secondary financing rather than a gift, even with no payments due. That is why a forgivable second is underwritten as a loan first and forgiven later.
Another point concerns who may supply the money. Seconds from governmental entities, HOPE grantees, and HUD-approved nonprofits carry no maximum combined loan-to-value. That is why a government-backed second can push your total borrowing up to the full price.
Worked Scenarios on One $300,000 Home
These are percentages of price, with no dollar math. They assume a buyer who clears the credit floor for each option.
| Scenario | What it covers | Left for you |
|---|---|---|
| Grant at 3.5% | Entire 3.5% minimum | Closing costs, prepaids, reserves |
| Grant at 2% | A little over half the minimum | Remaining 1.5% plus closing costs |
| Forgivable second at 3.5% | Entire 3.5% minimum | Closing costs, prepaids, reserves |
| Repayable second at 5% | 3.5% minimum plus 1.5% for costs | Reserves, plus any costs above 1.5% |
Here is how the choice plays out for four buyers.
Picture a renter with thin savings and a 640 score. Because the grant requires a score of at least 620, they clear it, and the grant’s nothing-to-repay design keeps their payment lowest.
Say you are a nurse earning above the grant’s income test. A qualifying category, such as medical personnel, can still open the grant. The 140% area-median-income test applies unless a category fits.
Consider a repeat buyer selling one home to buy another with a 665 score. The grant is open to them. The forgivable second is open at a 640 floor. The repayable second sits at 660. All three fit, so the question becomes which cost they would rather carry.
Run the numbers on a buyer who needs help with closing costs too. Only the 5% repayable second reaches those costs. The grant and the forgivable second stop at the minimum investment.
The Grant, the Forgivable Second, and the Repayable Second Compared
The grant. It is released at closing with no lien, no payment, and no interest. The first lien must be an FHA 203(b) or renovation variant at 96.5% loan-to-value, on a one- to four-unit home. An HUD-approved education course is required. You qualify if your household income is at or below 140% of the area median, or if you fall into a qualifying category. Those categories include first responders, educators, medical workers, civil servants, military personnel, first-time buyers, and buyers in underserved census tracts. The grant is not offered in Washington.
The forgivable second. It is 3.5% of the lesser of price or appraised value, with no interest and no payment. It is forgiven after your first 36 or 60 on-time first-lien payments, with no 90-day-or-worse delinquency. It has no income limit beyond USDA’s own limits on a USDA first lien. It also needs no homebuyer counseling.
The repayable second. It is a real loan. It carries interest, a monthly payment, a 30-year amortization, and a balloon due in year 10. It comes with its own loan disclosure, separate from your first mortgage. Lendmire does not state its pricing here, because pricing varies by lender and file. The upside is flexibility: high-balance first liens are allowed, and the 5% version reaches closing costs.
No option stacks with another assistance program. A mortgage credit certificate is not permitted with the second-lien options.
Where the General Rule Breaks
USDA has no down payment to fill. USDA’s guaranteed-loan handbook lists no required down payment as a program benefit. On a USDA first lien, assistance therefore works mainly as help with costs to close. USDA also expects applicants to lack sufficient resources for conventional financing.
HUD-184 sets a lower floor. HUD’s Section 184 borrower page states a 2.25% down payment on larger loans. Your assistance percentage and that floor are different numbers, so a lender sorts out how they interact on your file. HUD also notes that the program uses manual underwriting, and your other debts count against your ratios. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
A grant can still become a loan. If a program books the money as a lien, it is not a grant, whatever it is called. Ask which one you are signing.
Seller credits are a different tool. They can help with eligible costs, but explainers say they cannot fund the FHA minimum investment. Credits above the allowed cap can also reduce the value used to size your loan. Ask your loan officer for the current limit before you negotiate.
The second lien changes approval math. A repayable second can lower the amount you qualify for, because its payment sits in your debt ratios.
Selling or refinancing early. If you sell or refinance before a forgivable second is fully forgiven, a balance may come due. Ask exactly how the program handles that before you sign. If you already own and are weighing a cash-out refinance for your next purchase instead, Lendmire’s piece How Much Down Payment a Primary Home Cash-Out Refinance Creates walks through that route.
Many public programs cap assistance or add recapture periods, so a state or city program may look different from these structures. Those programs do not stack with the ones above.
Key Terms Defined
- Minimum required investment: The cash you must put into an FHA purchase, set at 3.5% of the lesser of price or appraised value for scores of 580 and up.
- Second lien: A loan recorded behind your main mortgage that is paid after the first loan if the home is sold.
- Forgivable: A loan that is wiped out if you meet its conditions, such as staying current for 36 or 60 months.
- Balloon: A lump-sum balance due on a set date, which is year 10 on the repayable second.
- Combined loan-to-value: Your first mortgage plus any second loan, divided by the home’s price or value.
- Area median income: The midpoint household income for your local area, which the grant option’s income test compares your household income against (the test is 140% of area median unless a category applies).
What the File Needs
Lead with your situation, then document it. Plan on an application, a credit review, and an automated underwriting finding. Add proof of income, bank statements, and, for the grant, the homebuyer education certificate. Keep your reserves in mind, because assistance never covers them. HUD-approved housing counselors give independent advice, often at little or no cost, and the CFPB’s counselor finder can point you to one.
Where to Start
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, arranging these loans through wholesale lenders. Program details are subject to lender guidelines and full underwriting, and nothing here is a commitment to lend.
Frequently Asked Questions
Can I use assistance if I have owned a home before?
Yes. None of the options requires a first-time buyer, so repeat and move-up buyers qualify. The grant’s “first-time” status is only one of several qualifying categories. If your income is above the 140% area-median test, you can still qualify through a category, or choose a second-lien option that has no income limit.
Does assistance cover closing costs?
Mostly no. The grant and the forgivable second fill the minimum investment. The 5% repayable second adds 1.5% toward closing costs and prepaids. Anything beyond that is yours to cover, along with reserves.
What credit score do I need?
It depends on the option. The grant needs 620, the forgivable second 640, and the repayable second 660. The second-lien options allow a blended score, where a lower-scoring co-borrower is averaged in when the main earner brings at least 60% of income and the higher score. Minimums then become 660 and 670, and automated approval is required.
Can I use assistance on a rental or second home?
No. Assistance is for an owner-occupied primary residence only.
Is the assistance a loan I have to pay back?
It depends on the shape. The grant has nothing to repay. The forgivable second has no payment and is forgiven after 36 or 60 on-time first-lien payments. The repayable second is a loan with a monthly payment and a balloon in year 10.
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 FHA Resource Center – Minimum down payment requirement
2. USDA
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 Cash-Strapped Renter Trust Down Payment Assistance? · Down Payment Assistance Document Checklist for a Primary Home Purchase · Down Payment Assistance Requirements for a Move-Up Buyer Selling a Home
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.