Is there a limit to number of DPA programs I can use on a house?

Question

I am planning on buying my first house hack next year and currently exploring ways on how to finance my first down payment. Tennessee has the THDA Great Choice Plus Loan Program that allows $6K in a deferred forgivable loan in the form of a 30 year second mortgage, or a 6% down payment as a second 15 year mortgage amortized loan with the same interest as the first mortgage loan. Bank of America also has its Home Grants Programs: "Our America’s Home Grant® program offers a lender credit of up to $7,500 that can be used towards non-recurring closing costs, like title insurance and recording fees, or to permanently buy down the interest rate," and "Our Down Payment Grant program offers a grant of up to 3% of the home purchase price, up to $10,000, to be used for a down payment in select markets. Grant Program is available with one mortgage product. " where both do not require repayment. I cannot find too much in eligibility and requirements other than in their "Important Disclosures and Information" section at the bottom of the page, but if I am eligible, can I use both the THDA DPA loan and the BofA Home Grants?

Adam Summerer · Answer

Most of the time you can’t stack THDA DPA with a big-bank grant on the same purchase — each program’s second-lien / subordinate-financing rules usually block the other. Run a THDA Great Choice LE next to a plain FHA/conventional LE with the BofA grant alone and see which actually leaves you with less cash to close. For a house hack, also confirm the occupancy rules still fit if you plan to rent rooms/units. A local LO who closes THDA monthly will know the current subordinate-financing matrix better than the marketing PDFs.

Kathleen Timberlake · Answer

Hi Benjamin,

You more than likely wouldn't be able to combine THDA's program along with Bank of America's grant program - most programs like that prohibit additional financing programs. Also, I'm not 100% sure this went through, but I heard rumors that the 2nd lien on THDA loans (if you opt for the 6% assistance with the repayment) was going to change to a 30 year amortization, which would mean a lower monthly payment - I'd have to check with my preferred lender to see if that went through. Often times with the 6% THDA option though, depending on the price, you can truly have very minimal funds out of pocket. I've even had clients that truly had $0 out of pocket with THDA - so additional programs wouldn't even be necessary or usable if they only apply to closing costs/pre-paids.

If there's anything else I can help you with, don't hesitate to shoot me a DM!

Is there a limit to number of DPA programs I can use on a house?

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