Forgivable Second Mortgage
FHA.com
The program provides homebuyers with up to $10,000 (and a minimum of $1,000) in down payment and closing cost assistance in the form of a no-interest, second mortgage loan. HOMEstead funds are forgiven at 20 percent per year over five. The first mortgage is provided by PHFA at the same rate as the Keystone Home Loan program.
In order to qualify for the HOMEstead program, borrowers must meet the minimum down payment requirement based on whoever is insuring or guaranteeing the mortgage. HOMEstead funds may provide the remainder of the down payment and the closing costs. In certain cases, based upon family need, the funds may provide additional money to make the property affordable to the buyer.