Repayable Second Mortgage DPA Income

Understanding the income limits for down payment assistance (DPA) programs can be complex, especially when considering different types of DPA and how they interact with first mortgages. A significant update from HUD in 2024 has clarified how income limits are applied to certain repayable second mortgage DPA programs when paired with FHA first mortgages. This change allows more homebuyers to access DPA, even if their income exceeds the typical FHA maximums, offering a clearer path to homeownership in 2026. If you're looking for information on repayable second mortgage DPA income requirements, this guide covers essential details.

The 2024 FHA Policy Update for Repayable Second Mortgages and 2026 Implications

Effective for loans endorsed on or after September 30, 2024, the Federal Housing Administration (FHA) revised its policy regarding income limits for certain types of repayable second mortgage down payment assistance. This change, announced in HUD Mortgagee Letter 2024-13, clarifies that a first-time homebuyer is not subject to FHA's standard maximum income requirements for their first mortgage if they use specific types of repayable second mortgage DPA. This policy remains relevant for 2026, impacting how many families access homeownership.

Historically, many DPA programs, especially those integrated directly with FHA financing, adhered to strict income caps. This new policy creates more flexibility, allowing a wider range of potential homebuyers in Florida and Colorado to access DPA. This update specifically applies to repayable second mortgages that are not originated by state housing finance agencies (HFAs) like Florida Housing Finance Corporation or Colorado Housing and Finance Authority (CHFA), but rather through a wholesale lender partner, available through Simply Approved Mortgages. For baseline FHA credit standards, refer to FHA's 580 / 3.5% minimums established by HUD Mortgagee Letter 2010-29.

Practical Impact on Homebuyers: An Example for 2026

Consider a family in Miami-Dade County, Florida, earning an Adjusted Gross Income (AGI) that previously put them just above the income limits for certain FHA-paired DPA programs. Before the 2024 update, their income might have disqualified them from receiving down payment help, even if they otherwise met credit and debt-to-income (DTI) requirements.

With the new policy, if this family is a first-time homebuyer and utilizes a repayable second mortgage DPA that meets the criteria outlined in HUD Mortgagee Letter 2024-13, their income for the FHA first mortgage will not be capped by the usual FHA maximums. This means they could secure the FHA first mortgage and the DPA, making homeownership more accessible in 2026. The DPA provided through a wholesale lender partner, available through Simply Approved Mortgages, is a repayable fixed-rate second mortgage (terms, rates and APR vary by lender and program). It helps cover the down payment and/or closing costs.

This flexibility is crucial in areas like Denver, Colorado, where housing costs are high, and median incomes often push families past traditional DPA income thresholds. Programs like this are designed to bridge the gap between what you can afford and the total funds needed at closing. You can use our DPA eligibility checker to understand how these limits might apply to your specific situation.

How Repayable Second Mortgages Work

A repayable second mortgage DPA provides funds for your down payment and/or closing costs. Unlike a grant or a conditionally forgivable (forgiven only if the program's occupancy and time requirements are met) second mortgage, a standard repayable second mortgage has a fixed repayment schedule. It has its own interest rate and monthly payment, which is added to your first mortgage payment. Terms, rates, and APR vary by lender and program. Forgiveness is conditional: The balance is typically forgiven only after you occupy the home as your primary residence for the program's full forgiveness period, and selling, refinancing, or moving out sooner can trigger recapture of part or all of the assistance. Program conditions apply and vary by program.

When you combine a repayable second mortgage with your primary FHA loan, you effectively have two mortgage payments. It's essential to understand how this impacts your monthly budget and your total debt-to-income (DTI) ratio. Our affordability calculator can help you estimate your comfortable monthly payment.

For example, a common first-time homebuyer definition is someone who has not owned a home in the past three years. This definition is frequently used by DPA programs, including the wholesale-lender DPA offered through Simply Approved Mortgages, and state HFAs like Florida Housing and CHFA. Homebuyer education requirements are also common for DPA programs, ensuring you are well-prepared for homeownership. You can learn more about how different types of assistance function on our page about how DPA works.

Understanding Income and Purchase Price Limits for 2026

While the FHA update reduces first-mortgage income caps for specific repayable second mortgage DPA, individual DPA programs still have their own income and purchase-price limits. These limits vary significantly by program, location (county or city), and household size. They are often tied to the Area Median Income (AMI), as determined by HUD.

These limits are typically updated annually. For example, the SHIP program in Hillsborough County, Florida, has income limits based on HUD's annual AMI data for the Tampa-St. Petersburg-Clearwater MSA, as of HUD's FY 2025 Income Limits (published May 2025). Purchase price caps also vary by program and local housing market conditions. These caps prevent DPA funds from being used for homes beyond a certain value, ensuring the assistance benefits moderate-income homebuyers. You can explore different DPA options and their specific requirements on our programs page.

The wholesale-lender DPA offered through Simply Approved Mortgages is available in Florida and Colorado. This program also has its own income and purchase-price limits, which are separate from those of state HFAs and FHA. Always check the current limits for the specific DPA program you are considering, as of their latest published updates for 2026.

Expert Insight from Simply Approved Mortgages

Many homebuyers in Colorado and Florida, especially in rapidly appreciating markets like Boulder or Palm Beach, find themselves earning too much for traditional DPA but still needing help with the upfront costs. This FHA policy change, allowing certain repayable second mortgage DPA to bypass the standard FHA income limits on the first mortgage, has been a significant win. We've seen it unlock homeownership for families who were previously stuck in a financial no-man's land, where they made too much for assistance but not enough to save a large down payment quickly. This flexibility is essential for many aspiring homeowners in 2026.

Finding the Right DPA for You

Navigating the landscape of DPA options requires understanding the nuances of each program. The wholesale-lender DPA offered through Simply Approved Mortgages is a valuable tool for homebuyers in Florida and Colorado, especially now with the increased flexibility for FHA first mortgages.

We can help you understand if a repayable second mortgage DPA could work for you. You can start by reviewing the types of assistance available or consider submitting an application. We are a mortgage brokerage, not a lender, and our goal is to connect you with the right solutions.

Frequently Asked Questions (FAQ)

What is the FHA policy update for repayable second mortgages?

The FHA updated its policy in HUD Mortgagee Letter 2024-13, effective September 30, 2024. It states that first-time homebuyers using specific types of repayable second mortgage DPA are not subject to the FHA's standard maximum income requirements for their first mortgage. This change applies to DPA not originated by state housing finance agencies (HFAs) and includes the wholesale-lender DPA offered through Simply Approved Mortgages, impacting eligibility in 2026.

What is a repayable second mortgage?

A repayable second mortgage is a form of down payment assistance that provides funds for your down payment and/or closing costs, which you are obligated to pay back over a set period. It has its own interest rate and monthly payment, separate from your first mortgage. Terms, rates, and APR vary by program.

How do I know if I'm a first-time homebuyer for DPA programs?

Most DPA programs, including the wholesale-lender DPA offered through Simply Approved Mortgages, define a first-time homebuyer as someone who has not owned a primary residence in the past three years. This definition can vary slightly by program and state HFA (e.g., Florida Housing, CHFA), so it's always important to check the specific program's requirements.

Do all DPA programs have income limits?

Yes, nearly all down payment assistance (DPA) programs have specific income limits, which can vary based on the program, your household size, and the county or city where you are buying. These limits are often tied to the Area Median Income (AMI) and are updated periodically by HUD or the program administrator. Even with the FHA policy update, the DPA program itself will have its own income caps, which will be updated for 2026.

Can repayable second mortgage DPA be conditionally forgiven?

Some specific repayable second mortgage programs may offer conditional forgiveness under certain circumstances, but this is not universal. Such programs typically require the home to remain your primary residence for a specified period (e.g., 5-15 years) and often include other conditions. If you sell or refinance before the forgiveness period concludes, a portion or all of the assistance may need to be repaid. Always review the specific terms, conditions, and any potential recapture rules of a program carefully to understand your obligations before committing. Forgiveness is not automatic and is subject to fulfilling defined criteria.

Where can I find current income limits for DPA programs?

Income limits are typically published on the official websites of the state or local housing finance agency administering the program, or on HUD's website for federal programs. These figures are usually updated annually, and it's important to verify the latest information for your specific county and household size. For the wholesale-lender DPA available through Simply Approved Mortgages, current income limits will be provided at the time of inquiry.

What are common conditions for DPA conditional forgiveness?

Conditions for DPA conditional forgiveness vary by program but often include maintaining the property as your primary residence for a set number of years, meeting ongoing income eligibility, and not selling or refinancing the home during the forgiveness period. Failing to meet these conditions can trigger repayment obligations, sometimes including a pro-rated amount or the full assistance sum. Always review the program's specific documentation for all terms and recapture provisions.

Related Down Payment Assistance Resources

• Get my estimate
• Down Payment Assistance Calculator
• Complete Down Payment Assistance Guide
• Find Programs By State
• Homebuyer Education Requirements
• Understanding Closing Costs

Related reading

• Understanding Down Payment Assistance: Proven Income, Limits
• First-Time Homebuyer Definition And DPA
• FHA Loan Requirements: How They Impact: Rules and Down

Sources

• HUD Mortgagee Letter 2010-29
• CFPB Owning a Home buyer guide

These government publications are cited for general consumer education and for FHA/agency program background only. The repayable second mortgage available through Simply Approved Mortgages is a wholesale lender's product, brokered by Simply Approved Mortgages — it is not a grant, it is not the brokerage's own program, and it is not governed by HUD, FHA, or state housing finance agency rules; its terms are set by the wholesale lender. Simply Approved Mortgages (NMLS #2620881) is a mortgage broker and is not HUD, FHA, Florida Housing Finance Corporation, CHFA, or the CFPB, and is not affiliated with or endorsed by any government agency.