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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June 28, 2026An FHA appraisal differs from a conventional appraisal. While the goal of a conventional appraisal centers on market value, the FHA appraisal also focuses on the buyer's safety and soundness. FHA lenders select the appraiser, not the home buyer.
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