General Guidelines/Information For Lenders - Atlanta Housing DPA Homeownership Program

AH Down Payment Assistance Subsidy Loan (General Guidelines/Information For Lenders)

The AH DPA Homeownership Program is modeled to mortgage industry standards known as a ‘community second’ or a subsidy assistance loan.  AH will secure a subordinate lien position on the property being purchased.



Contingency Approvals 

There is no negative amortization. Interest will not accrue during the term of the loan.

The subsidy loan cannot be assigned.

AH does not issue contingency approvals or allow for trailing documents as a condition of loan review

Credit Report       

Lenders must submit to AH a complete copy of the residential mortgage credit report a tri-merged credit report, or a credit report utilized by an approved Automated Underwriting System (AUS). They cannot be more the 120 days old at the time of loan submission to AH.

DPA Funds

AH subsidy loan must be applied to customary closing costs. AH subsidy can be used to either a) reduce the primary loan amount, b) pay for closing costs, c) buy down the interest rate, or d) as a combination of either a, b, or c. It cannot be used to subsidize the sales price or solely used to buy-down the interest rate of the primary loan. Funds are prohibited from being used to pay off or to satisfy the borrower's outstanding debt at closing.


DPA Loan Submissions 





DPA Processing Time




First-Time Homebuyer


Geographical Restrictions

  1. The lender/loan officer is responsible to confirm, before submission, the transaction meets the Homeownership DPA Eligibility Requirements (see Exhibit A)
  2. The lender/loan officer’s submission must include, but may not be limited to all of the documents listed in Exhibit B for DPA consideration.
  3. The loan submission must document approval by the lender’s Underwriter
  4. Upon receipt of a complete loan submission, AH will process internally for a final review
    1. AH will continue to notify the lender via email, if the loan submission is incomplete or is missing support documentation.
    2. Incomplete submissions with missing documentation will be suspended until receipt of all requested documents

Processing time for DPA transactions is thirty (30) days from receipt of a complete loan submission/package

  1. All requests/transactions must be submitted by noon on Thursdays
  2. Transactions received by noon on Thursdays will go to LRC on Friday
  3. AH will notify the loan officer on Thursday afternoon if the transactions have been approved, denied, or suspended.
  4. If approved, the lender/loan officer will be sent a formal AH Subsidy Commitment Letter

A borrower is eligible as a ‘first-time home buyer if he/she has not owned a home or had an ownership interest in a residential or commercial property in the past three (3) years.

The subsidy loan is completely forgiven after a 10-year term of owner-occupancy.

The property being purchased must be within the ‘City of Atlanta’ geographical boundaries. Properties out-side of the geographical restrictions are not eligible

Gift Funds

Gift funds are permitted, however, gift funds cannot be used in lieu of the borrower’s own
funds/investment of not less than $1,500. Gift funds can be in addition to the borrower’s
own $1,500 investment. AH must be made aware of ‘gift funds’ at the time the credit file is
submitted. AH must be provided with the customary documentation of the donor’s name,
address, telephone number, his or her relationship to the home buyer, the dollar amount of
the gift, and a statement that no repayment is required or expected.


Eligibility income cannot exceed 80% of the current HUD MSA AMI for metro Atlanta and is updated annually by HUD. If married, the combined revenue for all borrowers on the primary loan cannot exceed the maximum 80% of current AMI, even if only one spouse or partner is on the note; if two or more unrelated buyers are on the primary loan, the combined income for all borrowers cannot exceed the maximum 80% of current AMI.

  1. Wages/earnings/W-2 income cannot exceed max eligible income of 80% of the
    current AMI
  2. Self-employed (Schedule C) gross income (not the adjusted income with allowable IRS write-offs) cannot exceed the eligible income of 80% of the current AMI
  3. Wage/earning/W-2 income PLUS self-employed (Schedule C) gross income cannot exceed the maximum qualified income of 80% of AMI

Income includes, but is not limited to, employment income, overtime income, commissions, bonuses, alimony, child support, second job income, stipends, and self-employment (Schedule C, K, Corporation or Subchapter S) income, etc. Current income/earnings determine eligibility income. Eligible income cannot exceed the prescribed area median income (AMI) percentage at DPA approval. The qualifying income used on the lender’s 1003 loan application will not be AH’s sole source of verification to determine if the buyer is income-eligible.

Interest Rate

There is no interest rate or deferred interest rate charged on the AH DPA subsidy.

Layering Other DPA Sources:

The AH DPA can be used in conjunction (layered) with other DPA sources, if approved and accepted by AH and the primary lender. AH reserves the right to modify and/or reject
layering of its subsidy.

Lien Position

The AH subsidy assistance will be in a second (2nd) lien position after the primary lender. AH
will consider a third (3rd) lien position when the City of Atlanta, Invest Atlanta, or the Atlanta
Community Land Trust’s subsidy assistance sources are also ‘layered’ as part of the

Married Persons

For married persons who are not legally divorced or legally separated through
sufficient documentation from the courts to confirm same, income verification for
both parties must be provided in the credit package from the lender, regardless if
only one person is making application and will be signing the AH loan documents.

Non-Occupant Co-Borrowers

The maximum purchase/sales price for eligible properties is $375,000 (effective 09-2023)

Own Funds

The minimum contribution from the buyer cannot be less than $1,500 from their own funds.
Gift funds cannot be used in lieu of the borrower’s own funds. The $1,500 can be in the form
of the earnest money deposit, closing costs on the HUD-1/CD, or related POCs, e.g. appraisal,
home inspection, etc.

Primary Loan

The primary loan cannot be held by a private individual neither by the seller.


Eligible properties are single-family detached (SFD), townhomes (THs) and Condominiums

Property Inspection Report

A Property Inspection Report is required on all existing properties; and optional for new

Purchase Price

The maximum purchase/sales price for eligible properties is $375,000 (effective 09-2023).

Purchase Rehabilitation Loans

Qualifying Ratios


Qualifying Loans

For purchase/rehabilitation loan transactions, the maximum rehabilitation costs for improvements is limited to $35,000 and can be used for safety and soundness repairs, functional obsolescence, energy efficiency, and handicap accessibility.

For purchase/rehabilitation loan transactions, the maximum rehabilitation costs for improvements is limited to $35,000 and can be used for safety and soundness repairs, functional obsolescence, energy efficiency, and handicap accessibility.

A. All loan submissions must have a middle credit score of no less than 620.

B. For all loans underwritten by an “Automated Underwriting System”, i.e., DU, LP or GUS, an AUS approval will be accepted if the housing expense ratio and the total debt-to-income ratio meet the following requirements:

660 - 700+Per AUS ApprovalPer AUS Approval
620 - 659Per AUS Approval< 50%

C. If the borrower does not meet these requirements, AH may, at its discretion, consider the transaction if there are no negative indicators of credit are present, and the lender provides AH with compensating factors including, but not limited to:

  • The borrower has successfully demonstrated the ability to pay rental housing expenses greater or equal to the proposed monthly housing PITI for not less than 12
  • The borrower has documented cash reserves of at least one month PITI after closing
    and the reserves are not gift funds

Re-Sale Restrictions



Request for Changes AFTER Approval



Requirements for Participating Lenders

The AH Deed-to-Secure Debt (DSD) has no re-sale restrictions.



Request for Changes to the transactions after the DPA loan approval has been issued AFTER Approval will result in:

  • A re-submission of the transaction with the updated required documents
  • The re-submission w/changes must be in by 12:00 noon on Thursday
  • The transaction will be re-scheduled for closing
  • Lenders participating in the AH DPA Homeownership Program must be a legally organized and properly licensed business entity in the state of Georgia
  • Participating lenders must have as a principal purpose the origination of secured single-family residential mortgage loans
  • Participating lenders must be approved as an FHA Direct Endorsement Lender and VA Lender or be a federally regulated financial institution or a state or federal
  • Lenders must be approved as a Fannie Mae, Freddie Mac, or Ginnie Mae Issuer


There is no repayment requirement as long as the homeowner occupies the property as his/her primary residence during the 10-year affordability period.  Repayment/Recapture of the AH subsidy amount is triggered when:

  • the property is no longer the homeowner’s primary residence;
  • the property is sold, regardless of the reason for the sale;
  • the homeowner obtains a ‘cash-out’ refinance, a HECM or HELOC loan; and/or
  • the homeowner obtains a reverse mortgage, regardless of payment structure.

Repayment/Recapture terminates, or is no longer in effect, after the 10th year.

Example of Subsidy Repayment/Recapture, if triggered during the 10-Year Affordability

Anniversary Year        Recapture %

Years 1 thru 5                100%

Year 6                             80%

Year 7                             60%

Year 8                             40%

Year 9                             20%

After year 10                  No Recapture is due

Shared Appreciation

In addition to ‘repayment/recapture’ (as noted above), shared appreciation is applicable at the time of sale of the property, regardless of the reason for sale.  Shared appreciation is triggered by the sale of the property only, and is based on the percentage of AH’s initial DPA investment.  Shared appreciation is no longer applicable after the 10-year affordability period.

Tax Returns

DPA submissions must have complete, filed and signed tax returns or tax transcripts for the most recent three (3) years.

Total Debt-to-Income Ratio

660 - 700+Per AUS ApprovalPer AUS Approval
620 - 659Per AUS Approval< 50%