Employer Assisted Home Loans
If your employer offers a housing benefit, it can help with your down payment, closing costs and sometimes reserves. Here is how Fannie Mae, FHA and at least one VA program treat money from your employer.
Quick answer
Yes. Under Fannie Mae’s rules, employer help can be a grant or a repayable, forgivable or deferred-payment second mortgage or unsecured loan, and it can pay all or part of the down payment or closing costs on a principal residence. It is not allowed on a second home or investment property, and the money must come directly from the employer or an employer-affiliated credit union.
What employer help can look like
The first four are Fannie Mae options. Employer gifts also work on FHA and with at least one VA program, and relocation buyouts are covered by Fannie Mae and FHA.
- A grant you do not pay back.
- A fully repayable second mortgage or unsecured loan from your employer.
- A forgivable second mortgage or unsecured loan.
- A deferred-payment second mortgage or unsecured loan.
- A gift from your employer or labor union on an FHA loan, or on a VA loan with at least one program.
- Your employer paying off your old mortgage as part of a relocation buyout.
Grants and loans both work
Use it for closing costs
Reserves are possible
Primary homes only
Relocation buyouts count
Proof of an established program
How Does Employer Down Payment Assistance Work?
Fannie Mae lets employer funds cover all or part of the down payment and closing costs on most principal residence purchases, and FHA lets employer assistance be used as cash to close.
Under Fannie Mae’s rules, your employer can help with a grant, or with a second mortgage or unsecured loan that is fully repayable, forgivable or deferred. The money can fund all or part of your down payment and closing costs on a home you will live in, though some two- to four-unit purchases need some of your own money first. Every type except an unsecured loan can also count toward reserves. Employer assistance cannot be used on a second home or an investment property.
The money has to come directly from your employer or an employer-affiliated credit union. The lender documents that it is an established company program rather than an accommodation for one employee, the dollar amount, the terms of any loan, and any other benefits such as relocation pay. If a secured second mortgage from your employer requires regular payments, those payments go in your debt-to-income ratio. If no regular payments are required, the lender does not need to add one.
FHA defines employer assistance as help to relocate you or with your purchase, including closing costs, prepaid items and mortgage insurance, and the money can be used as cash to close. On FHA, help that comes as a second mortgage from your employer is not treated as employer assistance, and a salary advance does not count. Your employer or labor union can also give you a gift on an FHA loan, and at least one VA program allows the same. See our gift funds page.
Why choose Saxton when your employer is helping
This page is for buyers whose employer offers a housing benefit, relocation package or homebuyer grant.
Grants And Loans Both Count
Fannie Mae accepts employer grants and repayable, forgivable or deferred loans.
It Can Cover Closing Costs
Under Fannie Mae’s rules, employer funds may pay all or part of the down payment and closing costs on a home you will live in.
Reserves Too, Sometimes
Under Fannie Mae’s rules, every type of employer help except an unsecured loan can count toward reserves.
Your Primary Home Only
Fannie Mae does not allow employer assistance on second homes or investment properties.
Relocation Buyouts Work
An executed buy-out agreement documents an employer payoff of your old mortgage.
Late Benefits Need Cash
If your employer pays after closing, FHA needs proof you have enough cash to close.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about using employer help to buy a home.
Yes. Under Fannie Mae’s rules, employer help can be a grant or a repayable, forgivable or deferred-payment second mortgage or unsecured loan, and it can pay all or part of the down payment or closing costs on a principal residence. It is not allowed on a second home or investment property, and the money must come directly from the employer or an employer-affiliated credit union.
Yes. Fannie Mae lets employer funds cover all or part of the down payment and closing costs on most principal residence purchases, and FHA allows money from an employer assistance plan to be used as cash to close.
No. Under Fannie Mae’s rules it can be a grant, or a second mortgage or unsecured loan that is fully repayable, forgivable, or deferred. On FHA, help that comes as a second mortgage from your employer is not counted as employer assistance.
Only if it requires regular payments. When a secured second mortgage from your employer has regular payments, they go in your debt-to-income ratio. When no regular payments are required, the lender does not need to add a payment.
Not under Fannie Mae’s rules. Employer assistance funds are not allowed on a second home or an investment property.
Under Fannie Mae’s rules: proof that it is an established company program and not an accommodation for one employee, the dollar amount, the terms of any loan, any other benefits being offered such as relocation pay, and proof the money came directly from your employer or its credit union. On FHA, the lender documents that you received the money.
If your employer is paying off your current mortgage as part of a relocation plan, the lender needs the executed buy-out agreement. Under Fannie Mae’s rules, a copy of a sales contract or listing agreement is not enough. On FHA, the lender may allow the net proceeds from a guaranteed relocation purchase to be used as cash to close.
Yes on FHA, where your employer or labor union is an acceptable gift donor, and at least one VA program allows the same. A salary advance is different and cannot be counted as assets to close on FHA.
Saxton Mortgage does. On Fannie Mae loans we offer, employer funds can cover all or part of the down payment or closing costs on most principal residence purchases, and on FHA loans employer assistance can be used as cash to close.
Find out what you qualify for
Send us the details of your employer’s benefit, and we will tell you how it can be applied to your purchase.
Get Pre-QualifiedLoan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.