GSFA Monthly Payments on DPA and Terms of DPA

The ReCoverCA program is unique because it is the only one with a forgiveness term. It is structured as a deferred loan with a 5-year term for forgiveness. While it technically has a 30-year maturity date like the first mortgage, the “effective” term for the borrower is 5 years. If you live in the home for 5 years, the balance is forgiven at 20% per year until it reaches zero. Unlike the Platinum “Assist-to-Own” which waits for you to sell to collect payment, ReCoverCA waits for you to stay to grant forgiveness.

Some buyers accelerate their mortgage payments to become debt-free faster. If you pay off your First Mortgage in full—even if you stay in the house—the GSFA Second Mortgage typically becomes due and payable immediately. The assistance loan is tied legally to the existence of the GSFA First Mortgage. Once the first lien is satisfied, the condition for holding the assistance loan is no longer met, and you must repay the remaining balance of the down payment assistance at that time.

The interest rates for all GSFA down payment assistance products are fixed. Whether you have a 15-year amortizing loan at the same rate as your first mortgage, or a deferred loan at 0%, that rate will not change for the life of the loan. You do not need to worry about the rate adjusting upward or your monthly payment increasing in the future. This stability allows for predictable budgeting. However, remember that the interest rate on the First Mortgage provided through these programs is often slightly higher than standard market rates to help offset the cost of the assistance.

The program guidelines for GSFA generally do not indicate prepayment penalties for the second mortgages. If you have an amortizing 15-year loan and receive a windfall of cash or want to eliminate that monthly bill, you typically can pay off the remaining balance of the assistance loan without a financial penalty. However, for deferred loans with a 0% interest rate, there is usually no financial financial incentive to pay them off early since the money costs you nothing to hold, unlike the amortizing loans which charge interest every month.

Yes, it does. When lenders calculate your “Debt-to-Income” (DTI) ratio to see how much home you can afford, they must include all mandatory monthly debts. If you choose an amortizing assistance option (like Platinum Standard or Golden Opportunities), that second monthly payment is added to your total debt load. This could slightly reduce the maximum purchase price you qualify for compared to a deferred option. If you choose the “Assist-to-Own” deferred loan, there is no monthly payment to include in the ratio, which is often helpful for buyers with tighter income-to-debt margins.

The “term” refers to how long the loan lasts. For the amortizing loans (Platinum Standard/Select and Golden Opportunities), the term is 15 years. This means if you make every scheduled payment, the debt will be fully paid off in 15 years, leaving you with only your primary mortgage for the remainder of the 30-year term. For the deferred loans (Assist-to-Own), the term matches your first mortgage (30 years), but practically speaking, the term ends whenever you sell or refinance the home, at which point the balloon payment for the full balance is due.

Generally, no. GSFA programs typically have a strict “no subordination” policy. Subordination is when a second lender agrees to stay in second place when a new first mortgage is taken out. Because GSFA does not allow this for most programs (Platinum and Golden Opportunities), you cannot refinance your first mortgage to get a lower interest rate without also paying off the down payment assistance loan in full. The only exception is the ReCoverCA program, which may allow subordination for a rate and term refinance if approved by the Master Servicer.

Although deferred loans like “Assist-to-Own” do not require a monthly check, the debt does not disappear (unless it is the ReCoverCA forgivable loan). The principal balance becomes “Due and Payable” in full upon the occurrence of specific “trigger events.” The most common triggers are selling your home, refinancing your first mortgage, or paying off the first mortgage in full. When any of these events occur, you must pay back the original assistance amount from your home’s equity or sale proceeds. Essentially, you are postponing repayment until you exit the original mortgage.

For programs that require monthly payments (Platinum Standard/Select and Golden Opportunities), the interest rate on the second mortgage is not arbitrary; it matches the interest rate of your First Mortgage. For example, if your primary home loan has a fixed rate of 6.5%, your 15-year assistance loan will also have a 6.5% interest rate. Conversely, for the “Assist-to-Own” and ReCoverCA deferred loans, the interest rate is set at 0.00%. This means that for deferred loans, the principal balance does not grow over time, and no interest costs accumulate while the loan sits silent against your property.

It depends entirely on which specific GSFA program you select. If you choose the “Standard” or “Select” options under the Platinum Program, or any option under the Golden Opportunities Program, the answer is yes. These are structured as 15-year amortizing loans, meaning you will have a second monthly bill to pay alongside your primary mortgage. However, if you qualify for the Platinum “Assist-to-Own” program or the ReCoverCA program, the assistance is structured as a “deferred” loan. In these specific cases, no monthly payments are required on the second mortgage as long as you occupy the home and do not refinance.