Title 42 — The Public Health and WelfareRelease 119-73not60

§12808 Second Mortgage Assistance for First-time Homebuyers

Title 42 › Chapter 130— NATIONAL AFFORDABLE HOUSING › Subchapter II— INVESTMENT IN AFFORDABLE HOUSING › Part D— Specified Model Programs › § 12808

Last updated Apr 5, 2026|Official source

Summary

The Secretary must provide a model program that local governments can use to make second‑mortgage loans to first‑time homebuyers. The loans let buyers delay paying both interest and principal. The program must also give homeownership counseling before and after purchase, help buyers find affordable homes, teach money management, explain mortgages and sales contracts, and help fix credit problems that block buying a house. Only first‑time buyers of single‑family homes used as their main home can get these loans. The loan amount can be no more than 30% of the home’s purchase price. Payments are postponed for at least 5 years after the home is bought. Interest must be at least 4% and the loan must be paid back over 15 years starting after the deferral. The loan is secured by a second lien that is below the first mortgage.

Full Legal Text

Title 42, §12808

The Public Health and Welfare — Source: USLM XML via OLRC

(a)The Secretary shall make available a model program under which units of general local government provide loans (secured by second mortgages) with deferred payment of interest and principal to first-time homebuyers.

(b)The program under this section shall provide for homeownership counseling to first-time homebuyers assisted, which shall include—

(1)counseling before and after purchase of the property;

(2)assisting first-time homebuyers in identifying the most suitable and affordable properties;

(3)providing homebuyers with financial management assistance;

(4)assisting homebuyers in understanding mortgage transactions and home sales contracts; and

(5)assisting homebuyers with eliminating any credit problems that may prevent the homebuyers from purchasing the property.

(c)Deferred payment loans secured by second mortgages may be provided under the model program under this section if—

(1)the homebuyer assisted is a first-time homebuyer;

(2)the property secured by the second mortgage is a single-family residence and is the principal residence of the homebuyer; and

(3)the principal obligation of the deferred payment loan secured by a second mortgage does not exceed 30 percent of the acquisition price of the residence to the homebuyer.

(d)(1)The payment of any principal and interest on a loan under this section shall be deferred for not less than the 5-year period beginning on the date of the acquisition of the residence by the homebuyer.

(2)The interest rate on the unpaid balance of a loan under this section shall be at least 4 percent.

(3)A deferred payment loan secured by a second mortgage shall be repayable over the 15-year period beginning at the end of the deferral period.

(e)A deferred payment loan assisted with amount 11 So in original. Probably should be “amounts”. provided under a grant under this section shall be secured by a lien on the property involved, which lien shall be subordinate to the first mortgage on the property.

Reference

Citations & Metadata

Citation

42 U.S.C. § 12808

Title 42 — The Public Health and Welfare

Last Updated

Apr 5, 2026

Release point: 119-73not60