Down payment assistance program that allows borrowers to receive a second loan up to 3% of the sales price/appraised value up to $15,000. Borrowers will have no required monthly payment on the second lien and the second lien does not accrue interest. Second lien is allowed when borrowers are approved for the Home Possible® first mortgage program.

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Home Possible® Eligibility

  • Minimum FICO score of 620
  • Income limit - Total qualifying income must be at or below 80% of area median income defined by Freddie Mac Home Possible Income and Property Eligibility Tool.
  • Borrowers are not required to be First-time home buyers.
  • Homeownership education is required when all borrowers are first-time homebuyers.
  • Borrower qualifies under Freddie Mac Home Possible® guidelines with automated underwriting Accept/Eligible approval.
  • Property limited to site built single family homes, PUDs and condos. No manufactured homes.
  • 30 year fixed rate primary purchases only.
  • Home Possible® price caps will apply.
  • Maximum loan amount = conforming loan limits (no High Balance)
  • Occupancy must be primary owner occupied. Non-occupying co-borrowers are permitted up to 95% LTV.
  • Seller concessions can be used to pay closing costs up to 3%.

Down Payment Assistance Second Lien

  • The second lien is due in full as a balloon payment upon payoff of the first mortgage.
  • Second lien can be paid off with a first mortgage refinance as a rate and term refinance since the loan is considered a purchase money second lien.
  • Borrowers will have no required monthly payment on the second lien as long as the original first mortgage is in place and the second lien does not accrue interest.
  • Loan amount can be up to 3% of the lesser of sales price or appraised value up to $15,000.

Example 1:

1. Home with a purchase price and appraised value of $450,000 in Salt Lake County.
2. 80% AMI Income cap is $92,320 per year.
3. Borrowers qualifying annual income is $90,000 with a FICO score of 680.
4. 3% of $450,000 is $13,500..
5. Down payment assistance second lien is $13,500 with no interest and no required monthly payment while the first mortgage is in place.
6. First mortgage is approved for Home Possible®

Example 2:

1. Home with a purchase price of $510,000 but appraised value is $500,000 in Utah County.
2. Income cap is $87,600 per year.
3. Borrower’s qualifying annual income is $85,000 with a FICO score of 660.
4. 3% of appraised value of $500,000 is $15,000.
5. Down payment assistance second lien is $15,000 with no interest and no required monthly payment while the first mortgage is in place.
6. Borrowers will be required to have an allowable source for $10,000 over appraised value if the seller will not reduce the sales price to the appraised value.
7. First mortgage is approved for Home Possible®

Q and A

Q: Is the income cap based on qualifying income or total household income?

A: Home Possible income cap of 80% AMI (Area Median Income) is based on the borrower’s income used to qualify for the loan and does not consider the income of other household members that are not obligated to the loan.

Q: Is a second mortgage payment factored into the housing or total DTI (Debt to Income ratio)?

A: NO because there is no required monthly payment or accrued interest for the second mortgage while the first mortgage is in place, a second mortgage payment will not be used in the debt ratios.