Forgivable Down Payment Assistance Programs in 2026: How to Find Them and Who Qualifies

Forgivable DPA is the closest product to a down payment grant. The borrower receives a second lien that is forgiven over time, meaning they never repay it if they stay in the home long enough. Understanding the forgiveness structure and who qualifies is the foundation for using these programs effectively.

How Forgiveness Works

Most forgivable DPA uses one of two schedules. Pro-rated forgiveness reduces the balance incrementally each year; a five-year pro-rated program forgives 20% of the balance annually until the full balance disappears at year five. Cliff vesting forgives the entire balance at the end of the forgiveness period with no partial forgiveness before that date. If the borrower sells or refinances before the forgiveness completes, the remaining unforgiven balance is due at closing.

Common Forgivable DPA Programs

• ✦State HFA programs: most state housing finance agencies offer forgivable second liens layered on HFA Preferred or HFA Advantage first mortgages
• ✦Fannie Mae HFA Preferred with community seconds: forgivable seconds from nonprofit or government sources can be layered on HomeReady
• ✦Freddie Mac HFA Advantage: similar structure with forgivable seconds from state HFAs
• ✦FHA with forgivable second: available through many state programs such as FL Assist, NC Housing, and PA Keystone

Qualification Requirements

First-time homebuyer status is required by virtually every forgivable DPA program; the definition is typically not having owned a primary residence in the prior three years. Income caps are set relative to area median income; common thresholds are 80% AMI or 120% AMI. Purchase price caps apply and vary by county. Homebuyer education of at least eight hours through a HUD-approved provider is required before closing on almost every program.

Refinancing With Forgivable DPA In Place

If the forgiveness period has not expired, the DPA second lien must be subordinated for the borrower to refinance the first. Many DPA servicers will not subordinate, which traps the borrower in their existing rate. Check the program's subordination policy before recommending forgivable DPA to a borrower who may want to refinance within the forgiveness window. This is especially important when rates are volatile.