Can Multiple Down Payment Aid Programs Combine?

Yes, sometimes. But aligning lien positions, CLTV ratios, and program rules is crucial. Stacking may not always be allowed.

How stacking works

Here are three examples of stacked down payment assistance programs we've seen:

• State + City program: Some cities offer additional aid on top of state DPA programs.
• State + FHLB grant: Federal Home Loan Bank programs can supplement state or local initiatives.
• Employer assistance + local grant: Some employers partner with local DPA providers to help employees purchase homes.

5 rules that decide if programs can be combined

• Second versus third lien conflicts: Lenders may have restrictions on the number of junior liens.
• CLTV limits: Combining DPAs must not exceed your lender's CLTV limit.
• Program bans: Some programs may not be stacked with others.
• The most restrictive rule: The program with the most stringent eligibility requirements will typically apply.
• Longer closings: Stacking DPAs often results in longer closing times due to additional paperwork and processing.

Questions to ask before you stack assistance

• Disclosure: What are the program terms, conditions, and disclosures?
• Approved program partners: Who can provide the DPAs being considered?
• Timing: How long will it take to secure each DPA?
• Resubordination: Will lien positions need to be adjusted during the loan process?
• Seller credit fallback: Can you still qualify if the DPAs aren't approved in time?

Can I combine state and city down payment aid programs?

Yes, it is possible to combine state and city down payment aid programs. However, eligibility criteria, income limits, and other requirements may vary between programs, so it's essential to meet all the conditions for each program separately.

Can I use a Federal Home Loan Bank (FHLB) grant alongside a state down payment assistance program?

Yes, you can potentially combine an FHLB grant with a state down payment assistance program. However, lenders may have their own underwriting rules and restrictions on the number of overlapping aid programs, so it's important to discuss this with your loan officer before applying for both.

Can I get employer assistance plus a local down payment aid grant?

Yes, you can combine employer assistance with a local down payment aid grant. However, ensure that both programs do not have conflicting requirements or restrictions regarding income, job type, or other criteria that may affect your eligibility.

How does the order of liens work when stacking multiple down payment aid programs?

When combining multiple down payment aid programs, the lien order generally follows the sequence of the mortgage: first mortgage, second lien DPA, and possible third lien DPA. Keep in mind that lender rules and local regulations can impact lien positioning.

Can I be denied a mortgage due to stacking multiple down payment aid programs?

While it is possible to combine multiple down payment aid programs, being denied a mortgage may occur if the overall debt-to-income ratio exceeds acceptable limits or if lenders perceive the combination as too risky. Always discuss your situation with a DPA-savvy loan officer before applying for multiple assistance programs.

Are there any restrictions on resubordination when stacking down payment aid programs?

Resubordination, or reordering liens, may be allowed when stacking down payment aid programs, but it depends on lender policies and local regulations. Some lenders may require resubordination to ensure they maintain the first lien position, while others may not allow it. Always confirm resubordination rules with your loan officer before proceeding.

What happens if I'm unable to meet the requirements of one down payment aid program in a stacked situation?

If you fail to meet the requirements of one down payment aid program in a stacked situation, it may result in the denial or cancellation of that specific program. In such cases, it is essential to understand whether other programs in the combination can still be used or if alternative funding sources are available for home purchase.

Can seller credits be used as an alternative to down payment aid programs?

Seller credits can sometimes be used instead of down payment aid programs, but this depends on lender and program guidelines. In some cases, seller credits may help cover closing costs, while in others, they may be limited or prohibited for use as a down payment. Consult your loan officer to determine if seller credits are an option for you.