The Quick Read: No. Assistance is not an FHA-only feature. The options Lendmire arranges sit under FHA, USDA and HUD-184 first mortgages, and some conventional loans accept assistance through other programs. The first mortgage sets what is allowed, and each assistance program adds its own tests. You do not need to be a first-time buyer, but the home must be your primary residence.
Why Does Everyone Connect Assistance to FHA?
Because FHA is the loan most buyers with thin savings hear about first. It asks for a low minimum investment and accepts a wider range of credit profiles. Assistance fits neatly on top of that. The pairing became a habit in people’s heads.
The habit is only part of the story. FHA does not hand out assistance. It sets the rules for who may provide it and how it gets documented. The money comes from somewhere else: a grant program, or a second loan placed behind your main mortgage.
Here is the plain version of how it works. You pick a first mortgage. Then you see which assistance programs are allowed to sit on top of it. That second step is where the answer to your title question lives.
Across the wholesale programs Lendmire places files with, down payment assistance programs come in four shapes. Some pair with FHA only. Others pair with USDA and HUD-184 as well. We’ll walk through each below.
Which First Mortgages Can Sit Under Assistance?
Three government-backed first mortgages can carry the assistance options Lendmire arranges, and conventional loans can carry assistance elsewhere. Which one fits depends on where the home is, who you are, and which assistance shape you want. Here is the side-by-side.
| First mortgage | Pairs with assistance? | Shapes available through Lendmire |
|---|---|---|
| FHA | Yes | Grant, forgivable, repayable, refinance-cost |
| USDA | Yes | Forgivable, repayable |
| HUD-184 | Yes, from a separate source | Forgivable, repayable |
| Conventional | Yes, through other programs | Not among Lendmire’s options |
A few notes on that table.
USDA is the rural home loan backed by the U.S. Department of Agriculture. It allows assistance if its loan stays in first lien position, per USDA’s loan origination FAQ. First lien position means your main mortgage gets paid first if the home is ever sold or foreclosed.
HUD-184 is a loan guarantee for Native American borrowers. The program itself does not give assistance. It comes from another source. In our network, that source is a forgivable or repayable second lien.
Conventional loans are a different world. Assistance on a conventional loan is called “Community Seconds,” and the second lien must come from an affordable housing program. Those programs are real. They are simply not the ones Lendmire arranges.
So the honest answer has two layers. In the wider market, no, assistance is not FHA-only. In the lane Lendmire works, the grant is FHA-only, and the second-lien options also reach USDA and HUD-184.
The Four Shapes of Assistance
Assistance is not one product. It is four different structures with different costs later. Reading the label alone can mislead you, so look at what happens after closing.
| Shape | Amount | Repay? | Credit floor |
|---|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay | 620 |
| Forgivable second | 3.5% of price or value | Forgiven over time | 640 |
| Repayable second | 3.5% or 5% | Yes, a real loan | 660 |
| Refinance-cost second | 1% to 3.5% of balance | Yes, a real loan | 660 |
Credit floors above are the lowest representative score among borrowers. All of this runs through wholesale lenders, subject to program guidelines and full underwriting.
The grant: nothing to repay
The grant covers 2% or 3.5% of the purchase price toward your FHA minimum investment. It is released at closing. No lien, no payment, no interest. It pairs with FHA first liens at 96.5% loan-to-value on one to four units. Specific FHA products include the standard FHA loan and the FHA 203(k) renovation loans.
Two tests apply. One is a homebuyer education course approved by HUD. You pay for it up front, and the cost is credited back at closing. The other is eligibility: household income at or below 140% of the area median income, or a qualifying category. The grant is not offered in Washington.
The qualifying categories are broad:
- 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, current, retired or volunteer
- First-time buyers
- Buyers in an underserved census tract
The forgivable second: a loan that fades
This is a second lien at 3.5% of the lesser of price or appraised value. It carries no interest and no monthly payment. It is forgiven in full after 36 or 60 on-time payments on your first mortgage, depending on the version. A 90-day or longer delinquency breaks that.
It is still a loan until forgiven. That distinction matters if you sell or refinance in the meantime. The credit floor is 640, and it works with FHA, HUD-184 and USDA first liens on one to two units.
The repayable second: a real second loan
This one is the most loan-like. It covers 3.5% or 5% of the lesser of price or appraised value. At 5%, the extra 1.5% goes toward closing costs and prepaid items. It charges interest and carries a monthly payment. The term is 30 years of amortization, with a balloon due in year 10. A balloon means the remaining balance comes due all at once, so plan for a sale or refinance by then.
It gets its own disclosures, separate from your first mortgage. It works with the same first liens as the forgivable second, and high-balance first liens are allowed. Credit floor is 660.
The refinance-cost second
If you already own and hold an FHA loan, this option covers 1% to 3.5% of the balance toward the closing costs of an FHA refinance. Combined leverage can reach 104%. It follows the repayable terms. It is not available for streamline refinances, and it cannot refinance an existing assistance loan.
Do You Have to Be a First-Time Buyer?
No. None of the four options requires it. Repeat buyers and move-up buyers qualify.
The three-year first-time definition appears in only one place. It is one of the grant’s qualifying categories, meaning no ownership interest in a residential property during the three years before you apply. Homemakers and single parents whose only past ownership was with a former spouse still count.
Income limits are narrow. The grant has its 140% area-median-income test unless you fit a category. The second-lien options carry no income limit, other than USDA’s own limits on a USDA first lien.
Many public programs elsewhere do use first-time-only rules, and definitions vary. Some use a lookback period. Some carve out exceptions. The written definition in each program controls.
Primary Residence Only
Assistance is for the home you will live in. A second home, a vacation property or a rental does not qualify. That ends the question. Everything else here assumes you are buying a primary home.
You also cannot stack one assistance program on top of another. A mortgage credit certificate is not permitted with the second-lien options.
What Sits Underneath: The FHA Basics
Most of what you pay at closing depends on the first mortgage. Here is what FHA asks for.
- A minimum required investment of 3.5% of the lesser of price or appraised value, for a representative score of 580 or higher.
- First-lien leverage up to 96.5%.
- An upfront mortgage insurance premium based on the base loan amount, which can be financed into the loan.
- An annual mortgage insurance premium that varies with your loan size and down payment tier. It lasts for the life of the loan above 90% loan-to-value, and 11 years at or below it.
- One-unit loan limits that vary by county.
The assistance options carry their own, higher credit floors on top of this. A 580 score may clear FHA’s door but not the assistance option’s door. A 10% minimum investment applies to FHA scores from 500 to 579.
A limited 203(k) first lien can include renovation up to $75,000. On the second-lien options, escrow holdbacks cover minor non-structural repairs up to $5,000.
Who Is Allowed to Provide the Assistance?
On FHA, the provider matters as much as the amount. Secondary financing must come from a governmental entity or an HUD-approved nonprofit. A random second lien from an outside party does not count as assistance.
State housing finance agencies run many programs. These programs often limit assistance to the agency’s own first-lien products.
That tie to a specific first mortgage explains why one buyer is told “FHA only” while another finds a program that works with a conventional loan. Both are right about their own program. They are not describing the same program.
Assistance Versus a Gift
These get mixed up often. A gift comes from a relative, an employer, a charity or a government agency. It cannot come from anyone who benefits from the sale, such as the seller. A gift letter says no repayment is expected.
Assistance depends on the provider’s status and the program’s terms instead. The paperwork differs, and so does what you owe later.
How to Choose a Shape
Start with who you are, then go to what you want after closing.
1. You work in public service, or your income is modest. Look at the grant first. Nothing to repay is hard to beat, if you meet the test and the home is on an FHA loan.
2. You are buying in a USDA area or using HUD-184. The forgivable and repayable seconds are your routes. The grant does not pair with those first liens.
3. You plan to stay put for five years. The forgivable second can work well. It fades if you keep making first-lien payments on time.
4. You expect to move or refinance sooner. Weigh the forgivable second carefully. Repayment may come due before forgiveness arrives.
5. You need help with closing costs too. The 5% repayable second covers them. The 3.5% versions focus on the down payment.
A thought on the repayable second. It can look expensive next to the others. But a loan that gets you into the home may still beat waiting years to save. This one is a genuine tradeoff, and the monthly payment and year-10 balloon belong in your budget before you choose it.
Common Mistakes
- Assuming “grant” means “free.” Many public programs attach a lien or a recapture period. Read the document. The grant option here has nothing to repay, but that is specific to it.
- Choosing the loan before checking assistance. Pick the first mortgage and assistance together. One can limit the other.
- Ignoring later costs. A deferred or forgivable second can complicate a sale or refinance. A USDA refinance cannot roll in an existing silent second, which has to be paid off or stay behind the new loan, per USDA’s servicing handbook.
- Forgetting the funds run out. Programs open, pause and close. Ask about availability before you plan around a number.
- Stacking. Two assistance programs cannot be combined in this network.
What the File Needs
The paperwork is lighter than most buyers expect. A typical file includes your application, an automated underwriting finding on the first mortgage, and the assistance program’s eligibility certifications. The grant adds the homebuyer education certificate. A second lien adds a note and a security instrument, and the repayable one adds its own balloon disclosure.
The first mortgage and the second are underwritten together. On the second-lien options, manual underwriting is allowed for the forgivable version but not for the repayable one. A lower-scoring co-borrower’s score can be blended in when the primary earner holds the higher score and earns at least 60% of household income. Blended minimums run 660 for the forgivable second and 670 for the repayable one.
Lendmire is a mortgage broker licensed for consumer lending in 16 states. It arranges these first liens and assistance options through wholesale lenders. Lenders do the underwriting and approval, and every file is reviewed individually. Programs change. This is not a commitment to lend.
Key Terms Defined
Down payment assistance: Money from a program that covers part of your down payment or closing costs, as a grant or a second loan.
First lien: Your main mortgage, which gets paid first if the home is sold or foreclosed.
Second lien: A smaller loan recorded behind your main mortgage.
Forgivable second: A second lien with no interest or payment that is erased after a set number of on-time first-mortgage payments.
Balloon payment: A large remaining balance that comes due all at once at the end of a set period.
Area median income: The middle household income for your county, used to set income tests.
Minimum required investment: The share of the price FHA expects you to put in, which assistance can fund.
Primary residence: The home where you actually live most of the year.
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. You can reach the team at 828-256-2183.
Frequently Asked Questions
Can I use assistance with a conventional loan?
Sometimes. Conventional loans can allow Community Seconds, including with products like HomeReady. The program offering the second must meet affordable housing rules. Those programs are separate from the FHA, USDA and HUD-184 options Lendmire arranges.
Does assistance work if my loan already allows no down payment?
Yes, in some cases. USDA allows no down payment, but assistance can still help with closing costs or reduce what you borrow. USDA’s rules allow the assistance second if the USDA loan stays in first position. Within Lendmire’s options, the forgivable and repayable seconds pair with USDA first liens.
Do I have to be a first-time buyer?
No. Repeat and move-up buyers qualify for every option Lendmire arranges. The first-time definition only matters as one of several categories under the grant. Other public programs may still limit assistance to first-time buyers, so read each program’s written rules.
Is the second lien free money?
No. The grant has nothing to repay, but the forgivable and repayable seconds are loans. The forgivable one is erased only if you make on-time first-mortgage payments for the required period. The repayable one has interest, a monthly payment and a balloon due in year 10.
Can I use assistance on a rental or second home?
No. Assistance is for an owner-occupied primary residence only.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging government-backed purchase loans and the down payment assistance options that sit on top of them through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Investors who want the broader program framework can review how DSCR loans work.
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References
1. HUD
2. USDA Rural Development: Single Family Housing loan origination FAQ
This article is part of Lendmire’s down payment assistance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: FHA Down Payment Assistance Ratio Rules for a First-Time Buyer · Can You Use Down Payment Assistance on a Condo or Townhome Purchase? · How Much Down Payment Assistance Can You Get?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.