Is There an FHA Second Mortgage?
April 16, 2026
It is true that the FHA 3.5 percent down payment is a relatively low requirement, but it represents a large cash outlay that some borrowers struggle to raise.
Many state and local housing authorities offer second mortgages to cover a home loan's down payment and/or closing costs. It's not the only use for a second mortgage, but it's an
important one. It can also be used to tap into the equity in your home that increases over time.
Why do people get second mortgages at purchase time?
When buying a home, the option for a second mortgage often takes the form of a so-called "silent second." These are commonly offered via Down Payment Assistance programs at the state or local level.
Depending on the terms of your purchase agreement, this type of second mortgage may be a deferred-payment loan, meaning the borrower does not make monthly payments on the second loan. The balance is repaid at loan payoff, whether through a sale or by ending the loan term.
Options for Tapping into Home Equity
Do you already have an FHA loan? You may apply for a second mortgage to access the equity you build up in the home over time.
This option is not offered via the FHA loan program itself. You will need to apply for a conventional home equity loan or line of credit.
There's no such thing as an FHA HELOC at press time, but your participating FHA lender may offer a conventional second mortgage option. Always remember that when you apply for the second mortgage, your lender must agree that the new loan is "junior" to the original FHA loan.
FHA Loan Rules for Second Mortgages
The FHA lender handbook includes regulations governing subordinate financing. In order for your second mortgage to be allowed at the time of purchase (for down payment assistance or similar programs), it must meet specific criteria.
Your second lien cannot have a balloon payment due within five years, and FHA loan rules add that combined monthly payments on both loans must be within the borrower's debt-to-income ratio, so you will need to run the numbers of your current debt load.
Additionally, borrowers cannot be charged a prepayment penalty on the second mortgage the same as with the primary FHA loan.
FHA Loan Articles
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August 10, 2026If you want to buy a home with an FHA mortgage, you must set up an escrow account to cover property taxes, homeowner insurance, and upfront closing expenses. While the FHA loan program has rules for funding these accounts, buyers often do not realize those rules can include approved and unallowed sources for escrow funds. What do you need to know before you set up and fund your escrow account for an FHA mortgage?
August 3, 2026Buying a home in a high-cost area requires understanding how FHA loan limits shape your financing options. Does the house for sale have a price above the local FHA loan limit? You may need to explore your jumbo loan options. There are conventional jumbo loans and FHA versions. Which is right for you? Much depends on your financial needs, plans, and goals for the loan.
July 30, 2026There is a common misconception about FHA loans that only a first-time home buyer can use the program. This is not true; repeat buyers can qualify for an FHA loan, but why does this misconception exist? Partially because state and local programs have first-time buyer requirements for down payment and/or closing cost assistance programs. So while you do not need to be a first-time buyer to get an FHA loan, you may need to meet that definition to qualify for down payment help.
