Secondary Financing
by Governmental Agencies

Information by State  Print version

The sum of all liens cannot exceed 100% of the cost to acquire the property. "Cost to acquire" is defined as sales price plus allowable borrower paid closing costs, discount points, repair and rehabilitation expenses, and prepaid expenses. It does not include buydowns, payment of personal debts or unallowable closing costs, such as underwriting fees, tax service fees, etc. Lenders approving secondary financing loans from federal, state and local governmental agencies using unique community financing programs should consult their HOC for any individual guidance. Secondary financing is any type of financing that creates a lien against the property, even if it is a "soft" second or has other features resulting in the ultimate forgiving of the debt; they are not gifts.

Please see: HUD Handbook 4155.1, Rev-5, CHG-1, Paragraph 1-13A