Stacking Employer-Assisted Housing with State DPA and C2P Loans (Without Violating the Rules)

If you’re trying to help employees buy or build homes near work, you’ve probably asked: can we stack employer-assisted housing, a state down payment assistance program, and a construction-to-permanent (C2P) loan—without running afoul of lending rules? Short answer: yes, but the details matter. The way funds are structured, timed, and documented determines whether an underwriter says “approved” or “nope.” I’ve helped employers, lenders, and homebuyers weave these together successfully. Here’s the playbook, with real-world examples and the potholes to avoid.

What “stacking” actually means in practice

When folks say “stacking,” they mean layering multiple sources of funds and financing on the same purchase. In this context:

• Employer-Assisted Housing (EAH): Down payment, closing costs, or principal assistance provided by an employer. Can be a gift, forgivable loan, deferred loan, or low-interest second mortgage.
• State or local Down Payment Assistance (DPA): Grants or subordinate loans from a housing finance agency (HFA), city, county, or nonprofit.
• Construction-to-Permanent (C2P) loan: A single loan that finances construction and then automatically converts to a standard mortgage (single-close), or a construction loan followed by a separate permanent loan (two-close).

Stacking is valuable because wages haven’t kept up with housing costs, and new construction often solves the inventory problem. But each layer is governed by different guidelines—mortgage agency rules, DPA program rules, and sometimes employer policy. The trick is aligning them so the final loan meets underwriting and compliance standards.

The three ingredients

1) Employer-Assisted Housing (EAH)

Common forms:

• Gift: No repayment, no lien. Straightforward, but typically taxable compensation unless handled carefully with your tax advisor.
• Forgivable loan: A second lien forgiven over time (e.g., 20% per year for five years), often contingent on continued employment and owner-occupancy.
• Deferred payment loan: Subordinate lien with no payments due until sale/refinance/maturity; may be 0% or low interest.
• Subsidized second: Below-market interest, amortizing payment, often designed to keep total housing costs in check.

Key underwriting points:

• Agency-eligible sources: Conventional, FHA, VA, and USDA allow employer assistance, with guardrails. Employers affiliated with the builder or seller can be considered interested parties—introducing caps or prohibitions.
• Documented terms: If it’s a loan, you need a promissory note and subordinate deed of trust/mortgage; terms must fit agency guidelines (no negative amortization, no balloon due before the first mortgage, no hard prepayment penalty conflicting with the first).
• Forgiveness schedule: Must be clear; if tied to employment, spells out repayment triggers if the employee leaves early.

Tax and HR considerations (practical, not tax advice):

• Gifts/forgiveness can create taxable income when granted or forgiven.
• Below-market loans can trigger imputed interest.
• Work with your CPA/benefits counsel to minimize surprises and communicate clearly with employees.

2) State/Local DPA

Typical structures:

• Grant (true gift): No repayment; sometimes paired with an HFA first mortgage.
• Deferred, forgivable second: 0% interest, forgiveness over a set period.
• Deferred, due-on-sale: 0% or low interest; repaid when the home is sold or refinanced.
• Shared appreciation: A portion of appreciation is repaid upon sale.

Program rules vary widely, but common features:

• Income limits and purchase price caps
• Homebuyer education
• Owner-occupancy and recapture/retention periods
• CLTV caps and layering rules (some allow multiple subordinate liens, others cap it at one)
• Restrictions on new construction timing (some won’t fund until a Certificate Of Occupancy is issued)

3) Construction-to-Permanent (C2P) Loans

Two models:

• Single-close: One closing up front. The loan starts as a construction line with draws, then converts to a permanent mortgage when the home is complete. Best for simplicity and rate certainty.
• Two-close: A standalone construction loan, then a separate permanent loan later. This is more flexible for DPA programs that won’t fund at the start but adds costs and rate risk.

C2P basics:

• Draw schedule tied to work completed, with inspections and title updates
• Interest-only payments during construction on funds disbursed
• Builder approval by the lender, builder’s risk insurance required
• Lock periods typically 9–12 months; extensions cost extra

Are these allowed to stack?

Let’s keep it high-level and accurate because guidelines evolve and lenders overlay their own rules:

• Conventional (Fannie Mae/Freddie Mac): Employer gifts and employer-provided subordinate loans are generally eligible. Community/Affordable Seconds from HFAs, municipalities, and certain nonprofits are well-established. CLTV limits apply, and subordinate financing must meet specific terms (no balloon before the first, below-market rates acceptable, deferred/forgivable allowed). If the employer is also the builder or seller, it can become an “interested party,” which limits contributions and complicates down payment sources.

• FHA: Allows gifts from employers and permits approved forms of subordinate financing. The minimum required investment (3.5%) can be met with eligible gifts or assistance. Parties with an interest in the sale (like the builder) cannot fund the borrower’s required minimum investment. Interested party contributions for closing costs are limited (commonly 6% of the sales price). Underwriters scrutinize any connection between the employer and participants in the transaction.

• VA: Flexible with gifts and assistance as long as the borrower qualifies on their own, and seller concessions rules are observed for parties to the transaction. VA can be paired with certain HFAs.

• USDA: Allows eligible gifts/assistance and some layering with HFAs; income and location restrictions are strict.

• Mortgage insurance: If you’re using a conventional loan with MI, the MI provider must approve the layering of assistance and overall structure. This is routine with Community/Affordable Seconds but still needs to be documented.

Lender overlays:

• Many lenders limit the number of subordinate liens (often to two).
• Some require a minimum borrower cash contribution even when assistance covers the down payment.
• Not all lenders offer single-close C2P with layered assistance; you’ll need a lender experienced in affordable housing and construction.

The guardrails that keep you out of trouble

If you remember just this section, you’ll avoid most headaches.

• Interested Party Contributions (IPC): If the employer is also the builder, developer, seller, real estate brokerage, or otherwise has a financial interest in the sale, the assistance may fall under IPC caps and, for some loans, can’t cover the required down payment. Solution: Use an unaffiliated employer (pure HR benefit) or run assistance through an independent nonprofit/HFA partner accepted by the agency.

• CLTV and lien terms: Total combined loan-to-value must meet agency standards. Subordinate loans must be recorded, with acceptable terms (no balloon earlier than the first mortgage maturity, no negative amortization, no shared lien priority).

• Disbursement timing: Many DPA programs will not fund until a certificate of occupancy or conversion to permanent financing. Your C2P must accommodate “dry” seconds (lien recorded at initial closing, funds disbursed later) or a two-close structure.

• Documentation: Every source of funds must be fully documented—gift letters, employer assistance agreement, DPA approval, notes, and deeds of trust. Gift funds need a paper trail from donor to settlement.

• RESPA/Section 8: No kickbacks or referral fees between the employer, lender, and builder. Any marketing/services arrangements must be bona fide and at fair market value.

• Fair housing and employment law: Offering EAH selectively can create discrimination risk. Define clear, neutral eligibility criteria (e.g., tenure, full-time status, location, income tiers) and maintain consistent administration.

• Taxes: Don’t surprise employees. Clarify if assistance is taxable and when (at disbursement, annually, or upon forgiveness). Put it in writing and route employees to tax advice.

How C2P changes the funding choreography

The biggest friction point with stacking EAH + DPA on new construction is timing. Construction loans disburse funds in stages, while most assistance is designed to land at closing. You solve this with structure.

Single-close C2P options:

• Dry seconds: At the initial closing, you sign and record the employer and DPA second mortgages and notes, but no cash changes hands yet. At completion/conversion, the DPA and/or EAH funds are disbursed and applied to reduce the principal per the program’s design. Not every DPA allows this—ask early.

• Escrow holdback: The employer pre-funds assistance into an escrow account at closing. Disbursements occur at conversion or upon certificate of occupancy. Requires a willing title company and clear escrow instructions. Some DPAs also allow their funds to be wired into escrow with delayed release.

Two-close (construction-only then permanent):

• The borrower closes on a construction-only loan (possibly with a higher down payment), then pays it off with a permanent loan that includes the HFA first mortgage and the stacked assistance. This approach often fits DPA operational constraints but costs more (two sets of closing costs) and adds rate risk.

Pro tip: Ask the lender two questions right away: 1) Will you accept dry seconds on a single-close C2P? 2) Do your investors and MI partners accept delayed funding assistance at conversion?

If the answer is no, you’ll likely use a two-close structure or find a lender that can.

Four practical stacking models that work

Model 1: Single-close C2P with dry seconds (most efficient)

• First mortgage: Conventional C2P with MI or FHA C2P
• EAH: Forgivable loan recorded at initial closing, funded at conversion
• State DPA: Deferred second, recorded at initial closing, funded at CO or conversion
• Notes: Include clear funding instructions and “no payment due” until post-conversion conditions

When it shines:

• Lender supports dry seconds and you need locked rates and one closing
• DPA program allows recording before funding

Model 2: Single-close with employer covering closing costs, DPA at conversion

• First mortgage: Conventional or FHA C2P
• EAH: Employer grant applied to closing costs and prepaid items at initial close
• DPA: Recorded at initial close, funded at conversion to reduce principal

When it shines:

• Employer wants immediate impact
• Keeps IPC rules intact (confirm employer isn’t a party to the sale)

Model 3: Two-close to accommodate DPA operations

• Close a construction-only loan (interest-only draws)
• Build the house
• At completion, refinance into an HFA first mortgage with the DPA and EAH second(s) funding normally

When it shines:

• DPA/housing agency will not allow dry seconds or single-close construction
• Borrower can handle two closings and lock the permanent rate later
• Employer wants to minimize rule-bending and keep it simple administratively

Model 4: Employer partners with an HFA to offer a “Community/Affordable Second”

• Employer funds a pool at the HFA
• HFA originates the second mortgage under its standard documents and services the loan
• First mortgage is a standard HFA product; construction piece may be handled by an approved C2P lender

When it shines:

• Employer wants scale and compliance handled by pros
• Easier for underwriters (familiar HFA docs)
• Works best for repeated use, not one-off employees

Step-by-step playbook (timeline and roles)

Here’s how I structure these from kickoff to keys.

1) Strategy meeting (Weeks 0–2)

• Participants: Employer HR/legal/finance, prospective lender(s), local HFA/DPA program rep, a builder, and a title company experienced in C2P.
• Decide: Single-close dry seconds or two-close? Which first mortgage channel (conventional/FHA/VA/USDA)? Which DPA program fits? Confirm MI provider if conventional.

2) Verify program compatibility (Weeks 1–3)

• Ask DPA: Will you allow recording at initial close and funding at conversion? Any restrictions on C2P? Are there income/price caps? Homebuyer education deadlines?
• Ask lender: Do you allow multiple subordinate liens? What’s your max CLTV for stacked assistance? Any overlays requiring borrower cash?
• Ask employer counsel: Gift vs loan; tax treatment; employment clawback rules; how to handle job separation before forgiveness.

3) Draft program docs (Weeks 2–6)

• EAH: Promissory note, deed of trust/mortgage, assistance agreement, gift letter if applicable, escrow instructions (if funding later), and policy manual for employees.
• DPA: Lock eligibility, start homebuyer education, secure conditional approval.
• C2P: Builder approval package, plans/specs, budget, draw schedule, contingency, builder’s risk insurance, title update agreement.

4) Pre-approval and pricing (Weeks 3–5)

• Lock a C2P rate (9–12 months lock typical) with float-down if available.
• Set interest reserves and contingency (5–10% of hard costs).
• Verify CLTV calculations with all layers included.

5) Underwriting and initial closing (Weeks 5–8)

• Single-close: Close the C2P first mortgage; record the employer and DPA seconds with “no funding until conversion” provisions. Employer may fund closing costs if structured as a compliant grant.
• Two-close: Close construction-only loan. Employer assistance can still be documented now but will fund later.

6) Construction period (Months 2–10)

• Draws: Inspections ($100–$200 each), title updates ($75–$150), Lien Waivers, and change order approvals. Maintain contingency discipline.
• Budget tracking: Employer and DPA funds not used during construction in most cases; they land at conversion.

7) Conversion to permanent financing (Month 7–12)

• Certificate of occupancy
• Final inspection and appraisal update if needed
• DPA and EAH funds disbursed (principal reduction or closing costs as intended)
• Loan converts automatically (single-close) or you close the permanent loan (two-close)

8) Post-closing servicing setup (Month 8–12+)

• Record all final liens
• Establish forgiveness tracking (EAH and any forgivable DPA)
• Calendar compliance milestones: occupancy checks, employment status triggers, recapture windows

Two detailed case studies with real numbers

Case Study A: Hospital nurse building a starter home

• Market: Midwest metro with tight resale inventory
• Borrower profile: RN, W-2 income $85,000, 700 FICO, limited cash
• Project: New 3-bed home on infill lot
• Total cost: $415,000 (land $65k + construction $350k)
• Appraised value at completion: $425,000

Financing stack:

• First mortgage: Conventional single-close C2P, 95% LTV at completion
• EAH: $12,000 forgivable loan from hospital, forgiven 20% each year over 5 years; recorded at initial close, funded at conversion
• State DPA: $15,000 deferred, 0% due-on-sale second; recorded at initial close, funded at conversion
• Borrower funds: $5,000 earnest + reserves
• MI: Borrower-paid MI; MI provider approves both seconds as Affordable/Community Seconds

CLTV math at conversion:

• First mortgage: 95% of $425,000 = $403,750
• Seconds: $12,000 + $15,000 = $27,000
• CLTV: ($403,750 + $27,000) / $425,000 = 101.2% CLTV (allowed under conventional when Affordable/Community Seconds criteria are met)

Operational flow:

• Single-close C2P with a 12-month lock at 6.875%, one-time float-down to 6.49% at conversion
• Dry seconds recorded at initial closing; no funds disbursed until CO
• Employer covers $3,000 of upfront closing costs as a separate grant (not tied to any interested party)
• Closing costs (including C2P admin and title updates): $9,500. Draw inspections: 7 draws at $150 each = $1,050. Title updates per draw: $100 x 7 = $700.
• Builder’s risk insurance: roughly 0.25% of build cost = $875 for the term.

Outcome:

• Borrower’s out-of-pocket: ~ $9,000 (earnest + some closing cost + prepaid escrows)
• Monthly P&I at conversion: ~ $2,555 (principal and interest) plus taxes/insurance
• EAH forgiveness tracking handled by employer HR; if the nurse leaves before 5 years, remaining unforgiven portion is due at sale/refi.

Gotchas avoided:

• The hospital is not affiliated with the builder, so no IPC problem.
• DPA allowed recording at initial close with delayed funding.
• MI approved the CLTV above 100% because the seconds met Affordable Second criteria.

Case Study B: Teacher using USDA with a two-close approach

• Market: Rural area meeting USDA eligibility
• Borrower: Teacher, $60,000 income, 680 FICO
• Build cost: $350,000 total
• Appraised value: $350,000

Financing stack:

• Construction-only loan: 85% LTC from a local bank, interest-only during build
• Permanent loan: USDA Guaranteed loan up to 100% LTV on appraised value at completion
• EAH: $8,000 deferred, due-on-sale employer loan (0% interest)
• Local DPA: $10,000 grant from county HFA

Why two-close:

• County HFA would not allow dry seconds or single-close C2P
• USDA lender prefers to see the CO before closing

Operational flow:

• Close construction-only loan; borrower contributes $10,000 in initial equity for land and fees
• Build in 7 months; no cost overruns
• Permanent USDA loan at 100% of $350,000; EAH $8,000 and DPA grant $10,000 applied to closing costs and escrow replenishment, with the remainder as principal curtailment
• Borrower’s initial $10,000 is largely reimbursed at permanent close via the grant and EAH

Costs and timing:

• Two closings add $3,000–$4,000 extra in fees compared to single-close
• Rate risk: USDA rate at permanent close was 6.125% vs. initial outlook of 5.75%; acceptable to borrower due to grant benefits

Gotchas avoided:

• USDA’s rules on household income and property eligibility verified at application
• Employer’s EAH documented as an acceptable source (not a party to the sale)
• No IPC conflicts

Common mistakes and how to avoid them

• Treating an employer who owns the development as a neutral donor. If the employer is the builder/seller or has a financial interest in the sale, their assistance may be capped or disallowed for down payment. Fix: Run assistance through an independent, approved provider (HFA or nonprofit), or structure as allowable seller concessions within caps, not down payment.

• Assuming DPA will fund at initial closing on a C2P. Many DPAs won’t. Fix: Use dry seconds or a two-close structure; confirm fund timing in writing.

• Missing MI approval for layered seconds. MI can be the hidden veto. Fix: Get MI pre-approval of the structure early.

• Overlooking lender overlays. A program might allow two or three layers, but your lender may cap it at one subordinate lien. Fix: Shop for a lender comfortable with affordable lending and construction.

• Failing to lock long enough. Construction delays happen. Fix: Pick a lock term with cushion (e.g., 12 months), understand extension fees (often 0.025%–0.125% per 15–30 days), and negotiate a float-down.

• Weak documentation. Gift letters with missing language, unsigned EAH notes, or DPA approvals not final can kill a file. Fix: Use checklists and assign a point person to chase signatures and exhibits.

• Ignoring tax implications. Employees hit with unexpected W-2 income for forgiveness or imputed interest get upset. Fix: Provide plain-English tax summaries and encourage employees to consult a tax pro.

• No plan for employment changes. What if the employee resigns mid-forgiveness? Fix: Include clear repayment provisions and coordination with title/servicing to ensure any payoff demand can be produced quickly.

Cost, timing, and operational realities

Typical costs (ballpark):

• C2P rate premium: 0.25%–1.00% above standard purchase rates
• Admin fee for C2P: $1,000–$1,500
• Draw inspection: $100–$200 each; 6–10 draws is common
• Title updates per draw: $75–$150
• Builder’s risk insurance: 0.2%–0.4% of construction cost
• Contingency: 5%–10% of hard costs recommended
• Lock extensions: 0.025%–0.125% of loan amount per extension period
• DPA origination/servicing: Some programs charge $0–$750; others higher; read the guide
• Recording fees for seconds: $50–$150 each, varies by county

Timing:

• EAH program setup (for employers without an existing plan): 60–120 days to finalize documents and compliance policies
• DPA approval: 2–6 weeks after a complete application, plus homebuyer education time
• C2P underwriting and builder approval: 2–4 weeks
• Construction: 6–10 months for typical single-family homes, longer for custom builds

Documentation and underwriting checklist

• First mortgage:
• AUS findings (Desktop Underwriter/Loan Product Advisor) reflecting subordinate financing
• C2P lock and conversion terms
• Appraisal with “subject to completion” and final inspection plans/specs
• Builder approval file, contract, draw schedule, lien waivers protocol
• Proof of builder’s risk insurance

• EAH:
• Assistance agreement (gift or loan)
• Gift letter if a gift (exact loan amount or gift amount, no expectation of repayment, relationship)
• Promissory note and deed of trust/mortgage if a loan (forgivable or deferred)
• Employer’s funding source letter and wiring instructions (if escrowed)
• Any forgiveness schedule and employment conditions

• DPA:
• Program approval/commitment letter
• Note and deed of trust/mortgage
• Evidence of allowable recording at initial close and funding at conversion, if using dry second
• Homebuyer education certificate
• Program income/price limit verification

• Compliance:
• CLTV worksheet including all seconds
• MI provider approval for Affordable/Community Seconds (if conventional)
• Fair housing nondiscrimination policy for employer program
• RESPA compliance review (no referral fees)

• Title/closing:
• Preliminary title with subordinate lien instructions
• Escrow holdback instructions if applicable
• Final CD reflecting subordinate financing
• Post-closing recording confirmations

Rulebook quick-reference (what underwriters look for)

• Conventional:
• Gifts from employers are allowed for 1-unit primary residences.
• Affordable/Community Seconds from HFAs, municipalities, nonprofits, and sometimes employers are allowed if terms meet agency criteria: fixed or below-market rate; may be deferred or forgivable; no negative amortization; no balloon due before the first mortgage.
• CLTV can exceed 100% with eligible Affordable Seconds; confirm MI concurrence.
• If the employer is also the builder/seller, treat as interested party—subject to contribution limits.

• FHA:
• Gifts allowed from an employer or labor union; the donor cannot be a party to the sale (seller/builder/agent) for the borrower’s required minimum investment.
• Subordinate financing must be soft (no balloon before the first mortgage maturity, no harsh terms).
• Seller/interested party contribution caps apply to closing costs/prepaids, not to true gifts.

• VA:
• Gifts allowed; seller concessions limits apply to interested parties.
• Stacked assistance is feasible with lender buy-in; verify no unacceptable conditions.

• USDA:
• Assistance allowed if the source is eligible and documented; strict income and property eligibility.
• Watch DTI caps and reserve requirements with layered financing.

Always cross-check the current agency selling guides and your lender’s overlays.

Who needs to be at the table

• Employer HR/legal/finance: Sets assistance terms, handles tax and employment policies.
• Lender with C2P and affordable stacking experience: Not all lenders are equal here.
• HFA/DPA program rep: Clarifies program rules on timing and layering.
• Builder: Provides budgets, plans, and aligns on draw schedules and lien waivers.
• Title/escrow: Manages dry second recordings and escrowed funds.
• MI provider (if conventional and MI needed): Confirms acceptance of layered seconds.
• Borrower’s advisor/CPA: Helps the employee understand tax and budget impacts.

Coordination tip: Host a 30-minute kickoff call to agree on structure and a shared timeline. A single point of contact (often the lender) should own the master checklist.

Advanced structuring tips

• Use principal curtailments at conversion: If the DPA or EAH is disbursed at conversion, direct it to principal reduction rather than cash back to the borrower. Underwriters prefer this and it avoids cash-to-borrower issues.

• Interest reserve planning: If the borrower’s cash flow is tight, include an interest reserve within the C2P budget to cover construction-period interest. This must be carefully underwritten and included in the cost-to-complete analysis.

• Cap cost overruns: Add a clause that any overruns are covered by change orders funded from the borrower’s separate funds or additional gift funds—not from the assistance pools unless program rules allow.

• Escalation risk: Use allowances with clear ceilings and substitution terms for materials subject to price spikes. Your lender won’t fund beyond the appraised “subject-to” value plus approved contingency.

• Forgiveness tied to occupancy rather than employment alone: To reduce fair housing and employment-related risk, many employers tie forgiveness to owner-occupancy with a gravitational benefit for continued employment, not a pure “leave and you repay everything immediately” policy. Work with counsel to balance retention goals and compliance.

• MI “affordable” pricing credits: Some MI providers offer reduced MI premiums for qualifying affordable loans with documented income limits and seconds. Ask your lender to price both standard and affordable MI.

Employer program setup: keep it fair and simple

• Eligibility: Define who qualifies (full-time employees, tenure, income cap bands). Avoid criteria that could unintentionally exclude protected classes.

• Benefit amount: Flat dollar amounts are easy ($10,000 per employee), with higher tiers for critical-needs roles if you can defend them neutrally and consistently.

• Form of assistance: Most employers choose forgivable loans for retention. Five-year forgiveness at 20% per year is standard and easy to track.

• Administration: Decide whether HR administers in-house or partners with an HFA/nonprofit. Outsourcing compliance is often worth the modest servicing fee.

• Employee communication: Provide a simple, one-page summary with examples and a Q&A. Include a clear statement about tax treatment and a recommendation to consult a tax professional.

Frequently asked questions I get from employers and borrowers

• Can we pay the employee’s full down payment?
• Yes, if the loan type allows employer gifts for down payment (conventional and FHA do for 1-unit primaries) and the employer isn’t an interested party in the sale. If you’re affiliated with the seller/builder, the rules change.

• Can we forgive the loan if they stay five years?
• Yes, structured as a forgivable second with a recorded lien and clear forgiveness schedule. Many underwriters prefer recording the lien even if 0%.

• What if the DPA won’t fund until the home is complete?
• Use a dry second or a two-close. Your lender needs to be comfortable with delayed disbursement terms in writing.

• Can the borrower get cash back at conversion?
• Usually no, not with DPA and EAH. Surplus funds should go to principal reduction or allowable closing items.

• Is a 100%+ CLTV okay?
• With eligible Affordable/Community Seconds on conventional loans, yes, subject to MI and lender approval. FHA and USDA have their own limits; check loan-level rules.

• What happens if the employee leaves the company?
• Whatever your EAH agreement says. Typically, remaining unforgiven loan balance is repaid at sale or refinance. Some employers allow continued forgiveness if the employee stays in the home for the same period—speak with counsel.

A clean, compliant stacking checklist

• Choose the right structure:
• Single-close with dry seconds, or two-close
• Confirm DPA rules on timing and layering
• Confirm lender overlays and MI acceptance

• Lock and budget:
• 9–12 month lock with float-down
• Draw inspection and title update fees accounted for
• 5–10% contingency, builder’s risk, and interest reserve if needed

• Paper the file:
• EAH gift/loan docs complete and signed, including forgiveness schedule
• DPA approval in hand; program docs aligned with C2P timeline
• AUS reflects subordinate financing; MI approves

• Title and escrow:
• Dry seconds recorded at initial close; escrow instructions for delayed disbursement
• Subordination priorities set correctly

• Build and convert:
• Inspections, lien waivers, and change order approvals each draw
• Final CO; seconds fund; principal curtailment applied
• Conversion to permanent; servicing set up for any forgivable loans

A final action plan you can use this month

• Employers:
• Convene a 45-minute call with a C2P-capable affordable lending team and your local HFA.
• Decide on gift vs forgivable loan and draft plain-English employee materials.
• Build a simple, neutral eligibility policy and have counsel review it for fair housing and employment risk.
• If you’re affiliated with a builder, talk through IPC limits and alternative structures now.

• Lenders:
• Identify which DPAs in your footprint allow dry seconds and publish a cheat sheet for your team.
• Pre-clear MI providers for Affordable/Community Seconds with CLTV over 100%.
• Create a C2P + DPA + EAH closing checklist for title companies.

• Builders:
• Get pre-approved with lenders offering C2P.
• Standardize draw schedules, lien waiver processes, and change-order protocols to pass underwriting effortlessly.
• Educate your sales team on how EAH and DPA interact with new builds.

• Homebuyers (and HR advising them):
• Complete homebuyer education early.
• Gather income and asset docs for a full pre-approval, not just a pre-qual.
• Review the forgiveness schedule and what happens if you move or change jobs.

The bottom line: stacking employer assistance with state DPA and a C2P loan isn’t a loophole—it’s a legitimate, well-supported path when you respect the timing, lien, and documentation rules. With the right lender and a bit of upfront coordination, you can get employees into newly built homes near work, protect compliance, and do it without drama.