Common Programs & Loan Types

There are several types of finance assistance programs offered for first-time buyers. Down payment assistance is the focus of several programs. Others offer specific loan products designed to help first-time home buyers. The following are the most common types of programs that are currently offered and a list of typical conditions attached to a loan program:

- Down payment / Closing Cost Assistance - A deferred loan, usually at 0 percent interest with loan due on sale, title transfer, or first mortgage repayment, or in 30 years.

- Second Loan (Second Mortgage) - A mortgage loan in addition to the first, or primary, mortgage loan. This is a loan subordinated to the first mortgage.

- Shared Appreciation Loan - This is applicable to city and county down payment-assistance programs. It involves a loan with a zero or low-interest rate in exchange for sharing the property's increased future value with the lender. The appreciation is calculated by subtracting the original sales price from the current sales price or the current appraised market value. The principal balance amount plus a share of the appreciation will be due at the end of term or when the borrower sells, rents, or transfers title of the property.

- Deferred Loan - A second, third, or fourth mortgage that does not have to be repaid until the end of the loan period, the house is sold or refinanced, or title of property is transferred.

- Recoverable Grant - A small loan (or grant) that has to be repaid under certain conditions but otherwise becomes a true grant and does not have to be paid back.