Most down payment assistance in Florida comes as a second mortgage, a smaller loan recorded behind your main mortgage. It's built one of three ways. A forgivable second shrinks every year you keep the home until nothing is owed, a deferred second waits with no payment until you sell or refinance, and a repayable second carries a small monthly payment.
The three kinds of assistance
| Type | Monthly payment | When it's repaid | Florida Housing example |
|---|---|---|---|
| Deferred | None, at 0% interest | In full when you sell, refinance the first mortgage, transfer the deed or stop living in the home | FL Assist, Hometown Heroes |
| Repayable | Yes, a small fixed payment | Monthly over the term, with any balance due on sale, transfer, payoff or refinance of the first, or move-out | FL HLP second, 3% over 30 years |
| Forgivable | None | Forgiven a portion each year over its term | HFA Preferred PLUS and HFA Advantage PLUS, forgiven 20% a year over 5 years |
Deferred. With no payments and 0% interest, the balance never grows. You owe exactly what you received, and it's paid from your sale or refinance proceeds. Florida Housing says both FL Assist and Hometown Heroes are not forgivable.
Repayable. Here the second carries its own small payment for its full term. Florida Housing's FL HLP second is fully amortizing at 3% over 30 years, which means each payment chips away at the balance until it's gone.
Forgivable. Each year you keep the home, part of the balance is written off. Florida Housing pairs its PLUS seconds with its Conventional HFA Preferred and HFA Advantage first mortgages and forgives them at 20% a year over a five-year term.
Every one of these seconds requires you to live in the home. Florida Housing sets the amounts, income limits and terms and changes them, so the exact figures come from the program at the time you apply.
How the assistance works with FHA
FHA requires a 3.5% minimum required investment from every buyer, and HUD lets a governmental entity, such as a state housing finance agency, provide that 3.5% as a second mortgage. FHA 100% financing is built on that rule: a 96.5% FHA first plus an assistance second covering the rest, so the combined loan-to-value reaches 100%. FHA prices its mortgage insurance on the first mortgage alone, so the second doesn't change your MIP.
A worked example: the same $11,375, three ways
Chris earns $5,500 a month gross and is buying a $325,000 single-family home with FHA 100% financing. The 3.5% down payment is $11,375, and the assistance second covers it. The FHA first mortgage payment at a 5.75% rate on a 30-year fixed, with property tax at 0.95% a year, $283 a month for insurance and annual MIP, is $2,546.30.
| Deferred second | Repayable second at 3%, 30 years | |
|---|---|---|
| Second's monthly payment | $0.00 | $47.96 |
| Total house payment | $2,546.30 | $2,594.26 |
| Housing ratio on $5,500 | 46.3% | 47.2% |
| Owed after 2 years | $11,375 | about $10,890 |
| Owed after 5 years | $11,375 | about $10,110 |
FHA's housing ratio limit with an automated approval is 46.9%. The deferred second keeps Chris at 46.3%, because it adds no payment. The repayable second's $47.96 pushes the ratio to 47.2%, just over the line, so with that second Chris would add a little income or bring the price down to about $322,900. The deferred second stays at $11,375 until Chris sells or refinances, whether that's three years from now or twenty.
If the same $11,375 came as a forgivable second (Florida Housing offers its PLUS seconds with Conventional first mortgages), it would also add no payment and would shrink by $2,275 a year: $9,100 after one year, $6,825 after two, $4,550 after three, $2,275 after four and $0 after five.
When the payback is due
A deferred second comes due at a sale, a refinance of the first mortgage, a deed transfer or a move-out. Most buyers repay it from the sale proceeds at the closing table, the same way the first mortgage is paid off. A refinance needs room for the payoff, either inside the new loan or from your cash. A forgivable second costs nothing once its term has run.
You set that timing yourself. As long as you live in the home and keep the first mortgage, a deferred second sits there with no payment and no interest.
The cash to close calculator shows what's left to bring once the assistance covers your down payment. For the programs open on your price and income right now, call AAA Capital Funding at 888-601-8344 and we'll line up the deferred, repayable and forgivable options side by side.