Downpayment Assistance

HUD has long recognized the important role that downpayment assistance through secondary financing plays in providing affordable housing opportunities. There are three categories of DAP assistance providers:

1) Nonprofit and Nonprofit Instrumentality of Government DAPs: Nonprofits and Nonprofit Instrumentalities of Government that provide DAPs in the form of a lien in conjunction with an FHA first mortgage lien, must be approved by HUD. HUD maintains a Roster of those Nonprofits and Nonprofit Instrumentalities of Government that have been approved. See Mortgagee Letter 02-01 for more information on the approval process. Also, see: Non Profit Approval Information for Participation in Single Family Programs.

2) Government Entity DAPs: No approval is required for Government Entities that provide secondary financing in the form of a lien in conjunction with an FHA first mortgage lien. HUD does not maintain a list of Government Entity DAP providers. Mortgage lenders are responsible for assuring that a Government Entity DAP meets all appropriate FHA requirements, including those contained in Mortgagee Letters 94-2, 02-22, and HUD Handbook 4155.1 Rev-5,
Paragraph 1-13A.