The Quick Read: It depends on the type of help and on whether the first mortgage fits at that price. A grant with nothing to repay is hard to beat when you qualify. A repayable second is a real loan with a monthly payment and a balloon due in year 10. At $700K, the county loan limit on the first mortgage often decides the deal before the assistance does.
What Does Assistance Look Like at This Price?
Assistance comes in four shapes, and they behave very differently. Across the wholesale programs Lendmire places files with, each one sits on top of a government first mortgage. That means FHA, USDA or HUD-184, depending on the option. Lendmire is the broker. The lenders underwrite every file individually, subject to program guidelines.
Here is the side-by-side:
| Shape | Size | Repay? | Credit floor |
|---|---|---|---|
| Grant | 2% or 3.5% of price | Nothing to repay | 620 |
| Forgivable second | 3.5% of price or value | Forgiven on schedule | 640 |
| Repayable second | 3.5% or 5% of price or value | Yes, with a balloon | 660 |
| Refinance-cost second | 1% to 3.5% of balance | Yes, same terms | 660 |
Those are the shapes in Lendmire’s network of down payment assistance programs.
The grant is released at closing. No lien, no payment, no interest. It pairs with FHA first mortgages only. You need household income at or below 140% of area median income, unless 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. A homebuyer education course is required. The grant option is not offered in Washington.
The forgivable second carries no interest and no monthly payment. It is fully forgiven after 36 or 60 on-time first-mortgage payments, depending on the version. Miss that window by selling or refinancing early, and you are dealing with a lien.
The repayable second is a loan, and the program treats it as one. It has interest, a monthly payment, 30-year amortization and a balloon in year 10. At the 5% size it also covers closing costs and prepaid items. It has its own disclosure at closing.
The refinance-cost second is for people who already own and want to refinance on FHA. It is a different tool, so this article stays with purchases.
One scope note: assistance is for an owner-occupied primary residence only. It does not apply to a second home or a rental.
Consumer lending runs through Lendmire in 16 states, so availability depends on where the home is.
Does a Percentage Help Enough on a Pricey Home?
Yes, and this is where the network’s design matters. Many public programs cap help at a fixed dollar amount. That cap gets small against a high price. The options above size their help as a percentage of price or value. The help scales with the home.
Look at the FHA math. The minimum required investment is 3.5% of the lesser of price or appraised value. The grant at 3.5% matches that. So does the forgivable second at 3.5%. The repayable second at 5% covers the 3.5% minimum plus 1.5% toward closing costs and prepaids. At a price near $700K, those percentages cover a lot of cash. A fixed-cap program would cover a fraction.
Here’s the catch. The assistance size is never the whole story. Cash to close is only one of the two walls you hit at this price. The other is the first mortgage itself, covered below.
Picture a buyer with solid income and thin savings. They are moving up from a smaller home in a high-cost county. Cash on hand is the only thing keeping them out. That buyer is the best case for assistance. Now picture a buyer with plenty of savings who wants to preserve reserves. The calculation is different, and they might do better skipping it.
Is Down Payment Assistance Worth It for You?
Assistance is worth it when it solves a cash problem at a cost you can carry. It is not worth it when it only pushes you toward a bigger monthly obligation than you should take. Here is a simple test.
Worth it if:
- Cash to close is the one thing standing between you and a home you can afford on income alone.
- You qualify for the grant. Nothing to repay is a clean trade.
- You plan to stay through the forgiveness window of 36 or 60 payments.
- You can carry a repayable second’s payment and have a plan for the year-10 balloon.
Skip it if:
- The assistance is the only reason the payment works. That is overextension, and it is the most common way this goes wrong.
- You might sell or refinance before a forgivable second is forgiven.
- You have the cash and would keep other uses for it. The lien and the extra paperwork may not earn their keep.
- Your credit sits below the option’s floor.
The break-even question. Compare what the assistance saves up front with what it costs over the years you expect to stay.
- For the grant, the cost is nothing. The question is only whether the first mortgage fits.
- For the forgivable second, the cost is zero if you stay long enough. If you leave sooner, the unforgiven balance comes due.
- For the repayable second, the cost is the monthly payment plus the plan for the balloon. You can sell, refinance or pay it off by year 10. Know which one you intend before you sign.
Thinking out loud: the forgivable second often looks like the middle path, and for a buyer who expects to stay five or more years it usually is. For a buyer who isn’t sure about their job or city, it’s a gamble with a lien attached. Honest tradeoff, not a trick.
What Does It Cost Beyond the Assistance Itself?
Assistance does not remove FHA’s own costs. The upfront mortgage insurance premium is charged as a percentage of the base loan, and it can be financed into the loan. The annual premium is tiered by term, leverage and loan size. Above a certain base loan amount, the annual premium steps up. Above 90% loan-to-value, the annual premium lasts for the life of the loan. At or below 90%, it lasts 11 years.
That is the price of a low down payment, assistance or not. Weigh it fairly. A buyer who could put down much more might do better on a different first loan.
The stacking effect matters too. A repayable second adds a monthly payment, and lenders count it when they measure your debt against income. FHA’s manual underwriting ratios are 31/43, and automated approvals commonly allow more. The assistance options follow the automated finding. So the second doesn’t get a pass. It has to fit.
A forgivable or grant structure doesn’t add a payment. That is why it keeps the budget lighter. But a larger first mortgage still means a larger upfront premium and a larger annual premium. At $700K, “larger” is not small.
Will the First Mortgage Even Fit a $700K Price?
This is the question most buyers skip, and it can end the deal. FHA caps the mortgage amount by county, not the purchase price. HUD sets one-unit FHA limits from a floor of $541,287 to a ceiling of $1,249,125. A first mortgage at 96.5% of a $700K price is above the floor. So it fits only where the county limit is higher than that. In a floor-limit county, it doesn’t fit. Assistance can’t raise the limit.
Check your county’s number first. If the limit is too low, the options are a larger down payment, a different loan type, or a lower price. Assistance doesn’t change that math.
USDA is the other first-lien path, and it works differently. USDA’s guaranteed program has no maximum purchase price. It does limit household income to 115% of the area median. The home must also be in an eligible rural area. A $700K purchase on a USDA-eligible income is a stretch. Lenders check this closely. USDA is also not limited to first-time buyers.
HUD-184 serves eligible Native borrowers. Be clear on one point: the program guarantees the loan but does not provide the assistance itself. In Lendmire’s network, the forgivable and repayable seconds can pair with an HUD-184 first lien. Federal rules for junior liens add guardrails. The combined payments must stay within your reasonable ability to pay. The total must stay within the program’s loan-to-value and area limits. A balloon can’t come before 10 years unless HUD approves it.
Remember the pairing rules too. The grant pairs with FHA first liens only. The forgivable and repayable seconds pair with FHA, USDA and HUD-184. Nothing stacks with another assistance program. No mortgage credit certificate is allowed with the second-lien options.
Who Qualifies? (Not Only First-Timers)
Nobody has to be a first-time buyer. That surprises people. Repeat and move-up buyers qualify across all of the options.
Income limits are narrower than many assume. The grant has the 140% area-median-income test, unless you fall into one of its categories. The first-time buyer definition is just one of those categories. The second-lien options have no income limit, except USDA’s own limit on a USDA first lien.
Still own a home? That depends on timing and on how the new home will be used. The short rule: the new home must be your primary residence.
Credit matters. Floors run 620 for the grant, 640 for the forgivable second and 660 for the repayable second. On the second-lien options, a lower-scoring co-borrower’s score can be blended in. That works only when the primary wage earner brings in at least 60% of household income and holds the higher score. The blended minimums are 660 for forgivable and 670 for repayable.
What the File Needs
Expect a standard mortgage file: income, assets and credit documents, plus the program application. The grant adds an HUD-approved homebuyer education course. You pay for it up front, and the cost is credited back at closing. The forgivable second has no counseling requirement. The repayable second carries its own note and disclosures. Its balloon disclosure is separate.
Property types are mainstream. The second-lien options cover single-family detached or attached homes, condominiums and PUDs. The grant covers one to four units, FHA-approved condos and PUDs. Unique property types are excluded. The second-lien options allow minor repairs of up to $5,000 through an escrow holdback. That holdback is 150% of the estimate, and the timeline for completing the work varies by file and lender.
One more note on underwriting. The repayable second does not allow manual underwriting. The forgivable second does. If your file only works manually, that difference matters.
What Else Could You Do Instead?
Assistance isn’t the only way to close a cash gap. Compare it against these:
- A smaller or lower-priced home. It lowers every number at once, including the loan limit problem.
- Gift funds from family. They need a gift letter and donor documentation, but they carry no lien.
- Seller credits. They help with closing costs, not the minimum investment.
- Waiting and saving. Sometimes the honest answer. A buyer with shaky reserves may be better served by another year of building them.
- A larger down payment on a different loan. It can remove FHA’s mortgage insurance, though it takes more cash.
Questions to Ask Before You Accept Help
Bring these to your lender or broker:
1. Which shape is this: grant, forgivable or repayable?
2. What triggers repayment: a sale, a refinance, a move?
3. If I refinance later, what happens to the second lien?
4. Does my county’s FHA limit cover the first mortgage at this price?
5. How does the second count in my debt-to-income ratio?
6. Is the first lien one this assistance pairs with?
Key Terms Defined
Grant: Assistance with nothing to repay, released at closing with no lien.
Forgivable second: A second lien with no interest or payment that is forgiven after a set number of on-time first-mortgage payments.
Repayable second: A second loan with interest, a monthly payment and a balloon due in year 10.
Balloon: A lump sum due at a set date, after smaller payments that did not pay the loan off.
Combined loan-to-value: The first mortgage plus any second lien, divided by the home’s value.
Minimum required investment: The share of price FHA expects you to put in, which is 3.5% of the lesser of price or appraised value.
Frequently Asked Questions
Can assistance raise the FHA loan limit so I can buy at $700K?
No. The limit applies to the first mortgage amount in your county, and assistance sits on top of it. If the county limit is too low for the loan you need, assistance can’t close that gap. Check the county limit before you apply for anything.
Will a forgivable second hurt my monthly budget?
Not through a payment. It carries no interest and no monthly payment, so it doesn’t add to your debt-to-income ratio the way a repayable second does. It is still a lien, though. If you sell or refinance before the 36 or 60 payments are made, the balance can come due.
Does assistance mean I pay a higher cost on the first mortgage?
Assistance itself doesn’t change FHA’s own insurance structure. You still pay the upfront premium, financed into the loan, and an annual premium. What changes is the total you borrow, because a second lien adds to your combined leverage. Ask your lender to show you the full picture, not only the assistance line.
Are people who use assistance riskier for lenders?
Not on repayment, per research. Urban Institute reports that borrowers receiving assistance repay at the same rate as those who don’t. Your file is still underwritten on its own, subject to program guidelines and full underwriting.
Can I use assistance on a home I plan to rent out?
No. Assistance applies to an owner-occupied primary residence only, never a second home or a rental.
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, so nothing here is a commitment to lend.
At a high price, the county limit is what decides the deal. Check it first, then ask what the assistance really costs.
Investors who want the broader program framework can review how DSCR loans work.
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. HUD FHA Lenders – Maximum Mortgage Limits
2. USDA RD SFH Guaranteed Loan Program 101
3. Urban Institute: Expanding Housing Supply and Supporting Demand
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 You Get Down Payment Assistance While Still Owning a Home? · Does Down Payment Assistance Have to Be Paid Back? · Can a Six-Figure Earner With Student Loans Get Down Payment Assistance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.