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Oregon Housing and Community Services

Flex Lending: FirstHome Guideline Manual: Down Payment Assistance

Section 6: Down Payment Assistance

6.1 DPA Options

Standard DPA is 4% and the Department’s Focused Demographics DPA is 5%. Second mortgage must be in second lien position.

6.2 DPA Types

DPA is calculated as a percentage of the first Mortgage Total Loan note amount. Terms are income-based using Fannie Mae’s AMI limits.

  • Forgivable Second, for borrowers at or below 80% of AMI. DPA is in the form of a forgivable second mortgage loan bearing 0% interest and no payments. Terms are below in Section 6.3. 
  • Amortizing Second, for borrowers above 80% of AMI. DPA is in the form of an amortizing second mortgage loan with an interest rate 1% above the interest rate of the first mortgage loan. Additional loan terms are below in Section 6.4.

6.3 Forgivable Second Terms and Repayment

The forgivable second mortgage loan has no monthly payments and no interest accruing. The loan will be forgiven in full once the loan term has been completed.

  • Standard DPA: 4% of the total first mortgage loan note amount has a loan term of 30 years. 
  • Focused Demographics DPA: 5% of the total first mortgage loan note amount has a loan term of 15 years. 
  • Repayment: The outstanding balance is repayable if any of the following events occur prior to loan term or maturity date: 
    • Sale or Transfer: If all or any part of the property, or any interest in the property (including a beneficial interest), is sold, conveyed, or transferred, whether voluntary, involuntary or by operation of law. 
    • Refinance or Payoff: Refinancing or paying off the first mortgage loan. 
    • Rental of Property: If borrower rents or leases (whether by written or oral agreement) the property or any portion of the property. 
    • Failure to Occupy Property as Principal Residence: If borrower fails to occupy the property as the borrower’s principal residence within 60 days following the first mortgage loan closing. 
    • Default or Acceleration: Upon default or acceleration of the first mortgage loan for any reason.

6.4 Amortizing Second Terms

Amortizing second mortgage loans are provided to qualifying borrowers with income greater than 80% of AMI at an interest rate 1% over the first mortgage loan interest rate.

  • Standard DPA of 4% 
    • Income >80% up to 120% of AMI – 240-month fully amortizing term 
    • Income >120% of AMI – 120-month fully amortizing term 
  • Focused Demographics DPA of 5% 
    • Income >80% up to 120% of AMI – 360-month fully amortizing term

6.5 Use of DPA Funds

DPA funds may be used for up to 100% of the borrower’s cash requirement to close, including down payment, closing costs, pre-paid items, upfront borrowerpaid mortgage insurance and other related mortgage loan fees and expenses.

The borrower may not receive cash back at close, except earnest money deposit and prepaid items. Any unused DPA funds must be applied to the first mortgage note principal as a principal reduction, not to exceed 1% of the total loan amount. 

DPA may not be used to pay the difference between the sales price and appraised value if the sales price is higher (gap financing).

6.6 Additional Funds

Additional DPA or subsidy programs may be used in conjunction with the DPA provided they meet requirements of the department. OHCS Second Mortgage DPA must be in second lien position.