First Mortgage Options

The program offers two types of first mortgages:

✅FHA Loans: Require a 3.5% down payment.
✅USDA Loans: Require no down payment but have geographic restrictions. These loans are designed for rural areas and are not typically available in major metropolitan areas.

Down Payment Assistance (DPA)
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The program includes two layers of DPA to reduce upfront costs:
1. MyHome Loan
Provides down payment assistance of:

- 3% for USDA loans.
- 3.5% for FHA loans.

The MyHome Loan comes with no interest and no required monthly payments. Repayment is deferred until you sell, refinance, or pay off the first mortgage (up to 30 years).

2. Zip Loan

Offers additional down payment assistance. The interest rate on your first mortgage increases based on the amount of assistance received through the Zip loan:

- For the first 2%, the interest rate increases by 0.75%.
- For each additional 1%, the interest rate increases by 0.50%.

To access the full 6.5% assistance (3.5% MyHome + 3% Zip), your interest rate would increase to 6.25%.

Benefits of the Program: 

- 100% Financing: By combining an FHA loan with MyHome and Zip loans, you can achieve 100% financing—no money needed at closing for the down payment.

- Flexibility: FHA loans offer more flexible credit and income requirements compared to conventional loans.

Challenges to Consider

Higher Closing Costs: Down payment assistance programs generally have higher closing costs compared to loans where the borrower provides their own down payment.

Higher Interest Rates: Receiving down payment assistance may result in a higher interest rate on the first mortgage.

Refinancing Challenges: The added DPA can make refinancing difficult if your home’s equity doesn’t appreciate.

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