The Quick Read: It depends on the shape of the assistance. A grant and a forgivable second mortgage add no monthly payment. A repayable second mortgage does, and lenders count it when you qualify. Your first mortgage payment stays tied to the first loan alone.
That is the whole answer in four sentences. The rest of this page explains why, with the exceptions that catch buyers off guard.
Four Shapes, Four Different Payment Answers
Assistance comes in four shapes, and only one of them puts a second bill in your mailbox. Two add nothing to your monthly payment. One adds a payment you must budget for. The fourth is a repayable second used on refinances, so it matters only if you already own.
Here is the side-by-side. Every option is arranged through wholesale lenders, subject to program guidelines and full underwriting.
| Shape | Monthly payment from the assistance | Repayment |
|---|---|---|
| Grant | None | Nothing to repay |
| Forgivable second | None | Forgiven after 36 or 60 on-time payments |
| Repayable second | Yes | 30-year schedule, balloon in year 10 |
| Refinance-cost second | Yes | Same terms as the repayable second |
Think of the shapes as a ladder. The grant is the lightest touch. The repayable second is a real loan with real obligations. Lendmire is a mortgage broker, and its team places files across all four through its down payment assistance programs. Choosing the right rung is the biggest single decision in this process.
The assistance itself is always a percentage of the price or value, never a fixed dollar promise. The grant covers 2% or 3.5% of the purchase price. The forgivable second is 3.5% of the lesser of price or appraised value. The repayable second is 3.5% or 5% of that same lesser figure.
One scope note. Nobody has to be a first-time buyer. Repeat and move-up buyers qualify. But the property must be your owner-occupied primary residence. Assistance does not apply to a second home or a rental.
Why a Grant Adds No Payment
A grant adds no payment because it creates no debt. It is released at closing, with no lien, no note, no interest and nothing to repay. Your monthly bill is the first mortgage and nothing else.
The grant option pairs with FHA first mortgages, including the 203(b) and the 203(k) renovation loans. It covers 2% or 3.5% of the price toward the FHA minimum investment. FHA asks for 3.5% down, so the grant can fund most or all of that. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Here is the point many buyers miss. Compared with a buyer who saved the same down payment from their own pocket, your payment is identical. The first loan is the same size. The grant just replaced your savings.
Eligibility has two doors. Your household income can sit at or below 140% of the area median income. Or you can fit a qualifying category: a first responder, an educator, medical personnel, a civil servant, military personnel, a first-time buyer, or a buyer in an underserved census tract. The credit floor is 620. A homebuyer education course is required, and it is not offered in Washington.
What a Forgivable Second Really Costs You
A forgivable second has no monthly payment and no interest. It is still a loan secured by your home. That distinction matters later.
On the forgivable option, the lender places a lien for 3.5% of the lesser of price or appraised value. You make your regular first-mortgage payments. After 36 or 60 on-time payments, depending on the version, the second is forgiven. A 90-day or longer delinquency breaks that clock.
The lien matters because a government program’s own paperwork treats it as debt. HUD‘s published standard for FHA secondary financing counts payments on any second lien inside the total mortgage payment. When there is no payment, nothing gets counted. The lien still exists on title until it is forgiven or paid.
Public programs run on the same logic. Virginia’s housing agency describes its assistance as a deferred loan with an occupancy period. Your monthly payment stays flat, but the loan sits there waiting for its terms to play out.
The forgivable option pairs with FHA, USDA and HUD-184 first mortgages. The credit floor is 640. Manual underwriting is allowed, and no homebuyer counseling requirement applies. There is no income limit beyond USDA’s own limits if you use a USDA first mortgage.
So the payment answer is no. The commitment answer is yes. You are agreeing to stay in the home and keep paying on time.
When Does Down Payment Assistance Raise Your Monthly Payment?
Assistance raises your payment when it comes as a repayable second mortgage. That loan carries interest, amortizes over 30 years, and comes due in a balloon payment in year 10. It adds a second monthly payment on top of your first mortgage.
The repayable option covers 3.5% or 5% of the lesser of price or appraised value. At 3.5% it funds the down payment. At 5% it also covers closing costs and prepaid items, which is 3.5% for the minimum investment plus 1.5% toward closing costs. Cash to close drops sharply. The monthly bill goes up in exchange.
Two things set this option apart from the other shapes:
- It is a separate loan with its own disclosure and its own balloon disclosure. You will sign two sets of papers.
- The credit floor is 660, higher than the other options, and manual underwriting is not allowed. An automated underwriting finding is required.
For now, remember the trade: less cash at the table, more cost every month.
The balloon deserves a plain word. Year 10 is a deadline. By then you will have sold, refinanced or saved enough to pay off the balance. Plan for that on day one, not in year nine.
How a Second Payment Changes Qualifying
A second payment shrinks the first loan you can qualify for. Lenders add every required monthly housing obligation to your debt-to-income ratio. A repayable second counts. A grant or a forgivable second does not.
Debt-to-income is the share of your gross monthly income that goes to debt payments, including the new housing payment. FHA’s manual-underwriting guideline is 31% for housing and 43% for total debt. Automated underwriting often allows more room. The assistance options follow whatever the automated finding says.
Government lenders handle the paperwork the same way. USDA’s guidance tells lenders to enter the second mortgage’s monthly payment as “Subordinate Lien P&I” in its underwriting system. The payment goes in only if there is one.
Here is a plain scenario, no dollars needed. Two buyers earn the same income and want the same home. Buyer A takes a grant. Buyer B takes a repayable second at 5%. Buyer B brings far less cash to closing, but carries a bigger monthly obligation. Buyer B’s ratio runs hotter, and that may cap the price they can reach.
Blended scores help some households. If the primary wage earner brings in at least 60% of household income and holds the higher score, a lower-scoring co-borrower’s score gets averaged in. The blended-score minimums still apply: 660 for the forgivable option and 670 for the repayable one.
Does Assistance Change Your Mortgage Insurance?
No. FHA mortgage insurance follows the first loan, not the assistance. The upfront premium is 1.75% of the base loan amount, per a 2023 HUD mortgagee letter. You can finance it into the loan. The annual premium depends on loan term, loan-to-value and base loan amount.
The grant does not move that math. The second liens do not either, because the premium is tied to the base loan. A second does not grow it.
Two cautions are worth stating:
- A bigger first loan means a bigger premium. If assistance tempts you into a pricier home, mortgage insurance rises with it.
- Mortgage insurance is a real line in your monthly payment. It does not disappear because someone helped with the down payment.
Taxes and homeowners insurance also stay the same. They follow the home, not the financing.
The “Buy More House” Trap
The most common way assistance raises a payment has nothing to do with the assistance. It happens when the buyer spends the savings on a pricier home.
Assistance does not make a house cheaper. It makes it easier to reach. When a buyer sees extra purchasing power, the temptation is to stretch the price. A higher price means a bigger first loan, a bigger mortgage insurance premium, and bigger tax and insurance bills. All of those flow into the monthly payment.
Some data points on the ceiling. Current one-unit FHA loan limits run from $541,287 to $1,249,125 by county. Those limits cap the first loan. They do not tell you what your budget can carry.
The stronger move is simple. Set your price by the monthly payment you can live with, then use assistance to cover cash to close. Do not run it the other way around. One honest point of view here: a smaller house with a flat payment beats a bigger house with a balloon looming.
What Happens Later: Sale, Refinance and End of Term
The lien has to be dealt with eventually. That is the cost of a no-payment structure. Plan for three moments.
If you sell. The second lien gets paid from your sale proceeds at closing, unless it has already been forgiven. With a grant, there is nothing to settle. With a forgivable second, selling before the forgiveness date means the lien still needs attention. With a repayable second, you pay off the remaining balance.
If you refinance. A refinance is a new first loan, and the existing second has to be paid off or kept in place. Some government programs do not allow assistance seconds to be rolled into a new guaranteed refinance. Ask early, because this affects timing.
If you hold on. A forgivable second ends on its own after 36 or 60 on-time payments. A repayable second ends with the year-10 balloon. A grant needs no ending.
A rule of thumb helps. The longer you plan to stay, the better forgivable and grant structures look. The shorter your horizon, the more you should weigh the repayment terms before signing.
Public programs vary on this point. Many cap assistance, and some add a recapture period. Louisiana’s housing agency publishes its own assistance programs, for example. Those are separate programs from the ones described here, so compare terms before you assume they match.
Assistance, Seller Credits or a Price Cut?
Three tools solve three different problems. Assistance and seller credits lower the cash you need at closing. Only a lower price reduces the monthly payment.
| Tool | Lowers monthly payment? | Lowers cash to close? |
|---|---|---|
| Grant | No (same first loan) | Yes |
| Forgivable second | No | Yes |
| Repayable second | Raises it | Yes |
| Price reduction | Yes | Yes, if down payment is a percentage |
A price cut is the only tool that lowers both numbers. But sellers rarely cut price on request. Assistance is something you control, because eligibility comes from your file, not from a negotiation.
Seller credits can sit alongside FHA financing within program limits. They cannot be stacked with another assistance program, though. Nothing combines with a second assistance program, and a mortgage credit certificate is not permitted with the second-lien options.
Questions to Ask Before You Commit
Ask for the numbers in writing before you pick a shape. A good loan officer will walk you through these:
1. What is my full monthly payment with each assistance option, and without any? 2. Does the first mortgage’s pricing change with each option? 3. Is there a lien, and when is it forgiven or due? 4. What happens if I sell or refinance before then? 5. Does the second payment change the price I can reach? 6. Which first mortgage does this option pair with: FHA, USDA or HUD-184? 7. What does the file need? Typically an application, an underwriting finding, and homebuyer education for the grant.
Lendmire’s piece How Down Payment Assistance Changes Your Monthly Payment is a useful companion while you gather those answers. Pay attention to question two. Pricing on the first loan can differ across structures, and the only way to see it is a side-by-side comparison from your lender.
Key Terms Defined
Lien: a legal claim on your home that secures a loan. It must be paid or released when you sell.
Second mortgage: a loan recorded behind your first mortgage. Assistance seconds can be forgivable or repayable.
Forgivable loan: a loan that is wiped out after you meet its terms. Here, that means 36 or 60 on-time first-mortgage payments.
Balloon payment: the lump sum due when a loan’s term ends before it is fully paid off. The repayable second balloons in year 10.
Debt-to-income ratio: your monthly debt payments divided by your gross monthly income. Lenders use it to judge what you can afford.
Base loan amount: the FHA loan before the financed upfront premium is added. Mortgage insurance is calculated on it.
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 run through wholesale lenders, subject to program guidelines and full underwriting. This is not a commitment to lend.
Frequently Asked Questions
Will I owe two mortgage payments with down payment assistance?
Only with a repayable second. The grant and the forgivable second have no monthly payment. The repayable second is a real loan with a 30-year schedule and a balloon in year 10, so you pay it alongside your first mortgage. Ask your loan officer for both payments shown together before you choose.
Does down payment assistance lower my monthly payment?
Not by itself. A grant replaces your savings, so your first loan stays the same size. Compared with a buyer who put down the same amount from savings, the payment is identical. Assistance helps with cash to close, not with the monthly bill. Only a lower price or a smaller loan changes that.
Does a second payment count against my debt ratio?
Yes. A required monthly payment on a second lien goes into your debt-to-income ratio, which can lower the first loan you qualify for. A forgivable second has no payment, so it adds nothing. Automated underwriting makes the final call on how much room your ratios have.
Do I have to be a first-time buyer?
No. None of the options requires you to be a first-time buyer, so repeat and move-up buyers can qualify. The home must be your owner-occupied primary residence, though.
What happens if I sell or refinance early?
The lien has to be settled. A grant has nothing to settle. A forgivable second still needs attention if you leave before the 36 or 60 payments are made. A repayable second is paid off from sale proceeds or the refinance. Ask your lender how each option handles an early exit before you sign.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, USDA and HUD-184 home purchase financing with grant-style, forgivable and repayable down payment assistance options in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD
2. Virginia DHCD 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: How to Combine Down Payment Assistance With Builder Incentives · How to Use Down Payment Assistance on a 2-4 Unit Home · Can You Use a USDA Loan Twice With Down Payment Assistance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.