Forgivable vs. Repayable DPA — the honest tradeoff most loan officers won't explain.
Both structures help you get into a house with less of your own money. But they cost very different amounts depending on how long you stay, and the loan officer doesn't always pick the cheaper option for you. Here's the math.
Two-line summary
- Forgivable DPA: no second-mortgage payment, but the first-mortgage rate is usually 0.25–0.75% higher to fund the eventual forgiveness. You "pay" via rate.
- Repayable DPA: first-mortgage rate stays close to market, but you carry a separate 10-year second-mortgage payment at 1–2% above the first rate. You "pay" via a second monthly bill.
How forgivable DPA actually pays for itself
The assistance isn't free money. It's funded by the slightly-higher rate on your first mortgage. Over the life of a 30-year loan, that rate premium adds up.
Worked example — $300,000 first mortgage, 5% DPA = $15,000 assistance
| Forgivable DPA | Repayable DPA | No DPA (you saved your own) | |
|---|---|---|---|
| First-mortgage rate | ~7.50% | ~7.00% | ~6.75% |
| First-mortgage P&I | $2,098/mo | $1,996/mo | $1,945/mo |
| Second mortgage | None (forgiven) | ~$163/mo (10yr @ 9%) | None |
| Total monthly P&I | $2,098 | $2,159 | $1,945 |
| Total interest, 30 years (1st only) | $455K | $418K | $400K |
Illustrative only. Real rates and pricing change daily.
The "no DPA" path is cheapest over time — by ~$50,000 over 30 years in this scenario. That's the cost of the assistance. But that path requires you to have $15,000 saved already. If you don't, the DPA path is what gets you into the home now instead of in 5 years.
When forgivable beats repayable
- You're going to stay 5+ years in the home (or however long the forgiveness period is).
- You don't want a second monthly payment showing up on your DTI for the next 10 years.
- You're stretching your DTI to qualify already — adding a $150–$300/month second mortgage payment may break the qualification.
When repayable beats forgivable
- You may move within the forgiveness period. If you move before forgiveness completes, you owe the unforgiven portion and you've been paying the higher rate.
- You can comfortably afford the second payment. Repayable's lower first-mortgage rate often saves more in interest than the second-payment costs.
- You want maximum assistance. Some programs (like Arrive) only offer 5% on the repayable structure.
The hidden cost of forgivable: prepayment
If you sell or refinance the home before the forgiveness period ends, you owe the unforgiven balance. Most programs forgive monthly (1/36th, 1/60th, or 1/84th per month) — so partial credit applies — but the balance is real.
Worse: you've been paying the elevated first-mortgage rate the whole time. So you've been paying for an assistance benefit you didn't ultimately receive in full.
The upshot: forgivable DPA only beats no-DPA if you stay long enough. Don't pick forgivable just because "free money" sounds good — model the breakeven.
How we pick for your file
In your consult, we model:
- Your actual rate quotes on Forgivable, Repayable, and No-DPA paths.
- Total interest cost over your realistic stay length (not the 30-year worst case).
- How a second payment affects your DTI cushion.
- Your honest answer to: "How long will I stay in this house?"
If you'll stay long-term and you have most of your down payment, the cheapest path is no DPA at all. We'll tell you that straight. When NOT to use DPA →
Ready to model the math on your file?
Send your numbers — we'll quote 3 paths side-by-side and show the actual breakeven.