Down Payment Assistance · Licensed in NJ · CT · FL · NMLS #1630225
Down Payment Assistance — Forgivable Or Repayable, You Choose
Down payment assistance comes as a second lien behind an FHA first mortgage, and there are two kinds. The forgivable one disappears after you make thirty-six on-time payments. The repayable one is a real second loan, priced two percentage points above your first mortgage rate and amortized over ten years. You do not have to be a first-time buyer, and there is no income cap on the FHA programs.
Last updated August 2026 · reviewed by a licensed mortgage broker
AUS Approved
3.5% DPA Only
On FHA DPA
Required To Close
Your Answer Right Here
What Is Down Payment Assistance and How Does It Work?
Down payment assistance — commonly called DPA — is money provided to a home buyer to cover all or part of the required down payment and closing costs when purchasing a home. In most cases, down payment assistance comes in the form of a second mortgage or lien placed behind the primary FHA loan. Depending on the specific program, that second lien is either forgivable after you make a set number of on-time payments, or it becomes a fully repayable loan with its own monthly payment and interest rate.
The most common structure pairs a 3.5% or 5% FHA down payment assistance second lien with a 30-year fixed FHA first mortgage. The DPA funds cover the FHA minimum 3.5% down payment — and in some cases can extend to closing costs as well — allowing a qualified buyer to purchase a home with zero cash out of pocket beyond earnest money. This is why home purchase assistance programs are among the most searched mortgage topics for first-time buyers in New Jersey, Florida, and Connecticut. The U.S. Department of Housing and Urban Development maintains a directory of approved DPA programs and housing counseling agencies for buyers seeking additional resources.
Mortgage-World.com (NMLS #1630225) is licensed in NJ, CT, and FL and works with wholesale lenders that offer FHA DPA programs alongside state housing finance authority programs. If you are asking whether you qualify for closing cost assistance or a down payment grant, the fastest way to find out is a free mortgage review — we pull your options from multiple loan programs and show you exactly what you qualify for before you commit to anything.
FHA DPA Programs at a Glance
FHA DPA Program Options: 3.5% vs 5% Compared
Two FHA DPA tiers are available through our wholesale lender network. Both pair with a 30-year or 25-year fixed FHA first mortgage and can be used for down payment and closing costs.
| Program | DPA Amount | Min FICO | Max CLTV | DPA Structure | Manual UW? |
|---|---|---|---|---|---|
| 3.5% FHA DPA | 3.5% of purchase price or appraised value | 580 | 100% | Forgivable or Repayable | Yes |
| 5% FHA DPA | 5% of purchase price or appraised value | 580 | 101.5% | Repayable only | No |
| 3.5% Manufactured Home DPA | 3.5% of purchase price or appraised value | 620 | 100% | Repayable (20-yr term) | Yes |
Program Structure
How FHA DPA Second Liens Are Structured
When you use an FHA down payment assistance program, you are taking out two loans simultaneously. The first is a standard FHA mortgage at 96.5% LTV, covering the purchase price minus the required 3.5% minimum down payment. The second is the DPA lien, which provides exactly that 3.5% (or 5%, depending on the program) to cover the FHA down payment requirement. The combined loan-to-value — called the CLTV — reaches 100% on the 3.5% DPA program and up to 101.5% on the 5% DPA program, which can also absorb some of the closing costs.
On the 3.5% forgivable DPA option, no monthly payments are required on the second lien for its 360-month term, and the lien can be forgiven entirely at your request after 36 consecutive on-time payments on the first mortgage. That means after three years of on-time payments, the second lien disappears. On the repayable option, the DPA second lien carries an interest rate equal to the first mortgage note rate plus 2%, and it amortizes fully over 120 months (10 years). Both that second lien payment and the HUD housing counseling requirement must be completed before closing — at least one borrower must attend counseling from a HUD-approved nonprofit housing counseling agency.
A 2-1 temporary buydown is also available on the 3.5% FHA DPA program for 30-year and 25-year fixed first liens. The buydown must be seller or builder paid — the borrower cannot pay for it — and it must fall within the FHA 6% interested party contribution limit. The borrower always qualifies at the Note Rate, not the reduced buydown rate.
State-Offered Programs
Home Purchase Programs Available in New Jersey, Florida, and Connecticut
In addition to wholesale FHA DPA programs, buyers in New Jersey, Florida, and Connecticut have access to state housing finance authority programs that provide additional down payment help, often with below-market rates or forgivable second mortgages specifically for first-time home buyers and income-qualified buyers.
New Jersey Down Payment Assistance
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) administers the state’s primary first-time home buyer programs. The flagship program pairs a 30-year fixed rate first mortgage at a competitive interest rate with a $10,000 forgivable second mortgage for down payment and closing cost assistance. The forgivable DPA is available to first-time buyers purchasing a home in New Jersey as their primary residence, subject to income and purchase price limits that vary by county. Bergen, Passaic, and Hudson counties have higher purchase price caps reflecting the North Jersey market. NJHMFA also offers a Police and Firefighter Retirement System (PFRS) mortgage for eligible first responders and a Smart Start program that provides up to $22,000 in DPA for income-qualified buyers purchasing in targeted municipalities across New Jersey.
Florida Down Payment Assistance
The Florida Housing Finance Corporation offers the Florida Assist and the Florida HLP Second Mortgage programs for first-time home buyers statewide. The Florida Assist provides up to $10,000 in a 0% non-amortizing deferred second mortgage that becomes due only on sale, refinance, or transfer of the property — making it effectively a soft second with no monthly payment during ownership. The Florida HLP Second Mortgage provides up to $10,000 in down payment assistance at 3% interest amortized over 15 years. Florida Housing also runs the Hometown Heroes program, which targets community workforce employees including teachers, nurses, law enforcement, and first responders, providing up to 5% of the first mortgage loan amount in DPA with a maximum of $35,000. Income limits and purchase price caps apply and are updated annually. Buyers in Broward, Miami-Dade, and Palm Beach counties should verify the applicable limits before applying.
CHFA Programs for Connecticut Home Buyers
The Connecticut Housing Finance Authority (CHFA) administers Connecticut’s primary homeownership assistance programs. CHFA offers a DAP (Down Payment Assistance Program) second mortgage that provides 10,000 to qualifying first-time buyers purchasing a CHFA-financed home. The DAP loan carries a low interest rate and is repayable over the life of the first mortgage. CHFA also offers a Teachers Mortgage Assistance Program providing $2,500 in additional down payment help for certified Connecticut teachers purchasing in a priority or transitional school district. Mobile Home Purchase Loans, and specific programs for borrowers with disabilities and military veterans with service-connected disabilities are also available through CHFA. Purchase price limits and income caps vary by household size and town across Connecticut.
Who Qualifies
Qualifying Criteria: Credit, Income, and Property Guidelines
- Minimum 580 FICO for AUS-approved loans (3.5% and 5% DPA)
- Minimum 600 FICO for manual underwriting (3.5% DPA only)
- Minimum 620 FICO for manufactured home DPA
- First-time and repeat home buyers are eligible on FHA DPA programs
- U.S. Citizens and Permanent Resident Aliens
- Inter Vivos Revocable Trusts permitted
- Non-occupant co-borrowers allowed (relatives only on manufactured home program)
- No income cap on qualifying income for FHA DPA programs
- Owner-occupied primary residence only
- Single family detached and attached (1 unit)
- Duplexes (2 units)
- Planned Unit Developments (PUDs) and townhouses
- FHA-approved condominiums (no active litigation)
- Manufactured homes: double-wide eligible; single-wide with LLPA
- Investment properties and second homes are not eligible
- Property must meet FHA minimum property standards per HUD Handbook 4000.1
- FHA first mortgage at 96.5% LTV — 30-year or 25-year fixed rate
- Standard and high balance loan amounts both eligible
- DPA second lien cannot be resubordinated
- No lender fees on the DPA second lien — only title or escrow fees
- Repayable DPA: rate equals first mortgage Note Rate plus 2%; amortizes over 120 months
- Forgivable DPA (3.5% only): non-amortizing 360-month term; forgiven after 36 on-time payments on the 1st mortgage
- 2-1 buydown available on 3.5% DPA (seller or builder paid only)
- At least one borrower must complete housing counseling from a HUD-approved nonprofit agency before closing
- Full FHA appraisal required on all transactions
- AUS approval required (manual UW available only on 3.5% DPA and manufactured home programs)
- Tri-merged credit report with trended credit data required
- Verbal verification of employment completed within 10 days of closing (salaried) or 120 days (self-employed) on manufactured home program
- Income and assets from marijuana-related activities not permitted for qualifying
On the FHA programs you do not – repeat buyers qualify too
Before You Start
What Happens After You Apply
- You send the application
A few minutes online. No documents at this stage.
- A licensed loan officer calls you
Someone on our team covering your state.
- We ask for documents and pull credit
Only once you have decided to move forward.
- You get an approval to shop with
Typically back within the hour.
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Frequently Asked Questions
Frequently Asked Questions About Down Payment Assistance
Related first-time buyer pages: First-time buyer programs · First-time buyer Florida · First-time buyer New Jersey · First-time buyer Connecticut.
Related Resources
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- Licensed in
- NJ · CT · FL
- Broker license
- NMLS #1630225
- Florida license
- MLB 1987
- Family owned since
- 2017
- Office
- Ridgefield, NJ
Which structure costs less depends on how long you stay
Tell us where the credit sits, what you earn, and which state you are buying in. A licensed loan officer will tell you whether the forgivable or the repayable structure costs you less over the time you plan to stay, and what the counseling requirement means for your timeline.
Written and reviewed by Chris Luis, Broker/Owner of Mortgage-World.com, NMLS #1630225. About the author