Originating & Underwriting

Down Payment and Closing Cost Assistance

Helping borrowers overcome down payment and closing cost barriers

Low down payment mortgages are a great solution for helping borrowers achieve homeownership, but for some borrowers, finding even a 3% down payment can be a challenge. Fortunately, in many cases, Fannie Mae allows funds for part or all of a down payment and closing costs to come from a variety of sources, helping more borrowers achieve the dream of homeownership. 


Gifts can come from a variety of sources and can help borrowers defray upfront costs: 

  • Any individual who’s related to the borrower by blood, marriage, domestic partnership, adoption, or legal guardianship. That includes relatives (of the borrower or domestic partner), former relatives, godparents, spouses, individuals engaged to marry the borrower, children, or other dependents. 

For details, see Selling Guide section B3-4.3-04.


Grants are another way to help borrowers cover down payment costs: 

  • From employers, municipalities, states, counties, or state or local HFAs, nonprofit organizations (excluding credit unions), federal agencies, regional Federal Home Loan Banks, Native American tribes and their sovereign instrumentalities, or lenders (under specific conditions). 

For details, see Selling Guide section B3-4.3-06.

Community Seconds

Community Seconds mortgages can come from many of the same sources as grants, but a second lien or other document is placed on the property to enforce compliance with it. Although Fannie Mae does not purchase Community Seconds, it does purchase first mortgages associated with Community Seconds.

Benefits of Community Seconds include:

  • Loans may have more than one Community Seconds mortgage (e.g., a third lien) up to the maximum 105% CLTV.
  • Can be used with both standard and affordable products, such as HomeReady®.

See the Community Seconds Checklist and B5-5.1-02 (Community Seconds Loan Eligibility) to confirm that a subordinate mortgage meets Fannie Mae’s requirements for Community Seconds.

Sweat Equity

Sweat equity is a way to apply the value of volunteer work toward a borrower's down payment for a HomeReady® loan:

  • For borrowers putting in sweat equity to their homes for HomeReady loans, Fannie Mae no longer requires a 3% personal funds contribution nor caps the sweat equity contribution towards a down payment.

For details, see Selling Guide section B3-4.3-13, and Selling Guide section B5-6-02. To learn more about sweat equity, click here.