- Distinguish grants, forgivable loans, and deferred second liens
- Identify state HFA programs and FHA/Conventional compatibility
- Explain income limits and first-time buyer definitions
- Recognize how DPA affects rate and timeline
Types of DPA
- Grants — no repayment, often forgiven immediately
- Forgivable seconds — forgiven over 5–10 years if owner-occupied
- Deferred seconds — repaid on sale, refinance, or payoff
- Amortizing seconds — monthly payment alongside the first mortgage
Eligibility Patterns
Most state Housing Finance Agency (HFA) programs require: first-time buyer (no ownership in last 3 years), income under 80–120% of area median, completion of a HUD-approved homebuyer education course, and owner-occupancy.
Trade-Offs
DPA usually adds 0.25–0.75% to the rate and 7–15 extra days to closing. Educate the buyer on the resale or refinance impact before they accept a deferred second lien.
- DPA exists in grant, forgivable, deferred, and amortizing forms.
- Most programs require homebuyer education and owner-occupancy.
- Expect a rate bump and longer timelines.
Module 14 Exam — 5 questions
Pick the best answer for each question. Pass with 80% or higher to mark this module complete.
- 1.
A forgivable second lien is typically forgiven if the borrower:
- 2.
Most HFA first-time buyer programs define 'first-time' as:
- 3.
DPA typically affects the first mortgage rate by:
- 4.
Homebuyer education is required for:
- 5.
A deferred second lien must usually be repaid when the borrower:
0 of 5 answered