Title 42, The Public Health and WelfareRelease 119-110

§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 Sep 23, 2026|Official source

Summary

The Secretary must create a model program that lets local governments give second‑mortgage loans to first‑time homebuyers, with payments of principal and interest put off. The program must include homebuyer counseling before and after purchase, help finding affordable homes, money management help, clear explanations of mortgages and sales contracts, and help fixing credit problems. To qualify, buyers must be first‑time buyers buying a single‑family home they will live in. The loan amount cannot be more than 30% of the purchase price. Payments are delayed at least 5 years from the purchase date. The loan must carry at least a 4% interest rate and be repaid over 15 years after the deferral. The loan must be secured by a second lien on the property that is behind the first mortgage.

Full Legal Text

Title 42, §12808

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

(a)In general

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)Homeownership counseling

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)Eligibility requirements

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)Payment terms

(1)Period of deferral

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)Interest rate

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

(3)Repayment period

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)Security

A deferred payment loan assisted with amount 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

Sep 23, 2026

Release point: 119-110