---
kind: "section"
citation: "42 U.S.C. § 12808"
title: "42"
title_heading: "The Public Health and Welfare"
number: "12808"
heading: "Second mortgage assistance for first-time homebuyers"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/12808"
units:
  - "Chapter 130 — National Affordable Housing"
  - "Subchapter II — Investment in Affordable Housing"
  - "Part D — Specified Model Programs"
---

# §12808. Second mortgage assistance for first-time homebuyers

- (a) **In general—** The [Secretary](/usc/42/12704.md?p=16) shall make available a model program under which units of general local government provide loans (secured by second mortgages) with deferred payment of interest and principal to [first-time homebuyers](/usc/42/12704.md?p=14).
- (b) **Homeownership counseling—** The program under this section shall provide for homeownership counseling to [first-time homebuyers](/usc/42/12704.md?p=14) assisted, which shall include—
  - (1) counseling before and after purchase of the property;
  - (2) assisting [first-time homebuyers](/usc/42/12704.md?p=14) in identifying the most suitable and affordable properties;
  - (3) providing homebuyers with financial management assistance;
  - (4) assisting homebuyers in understanding mortgage transactions and home sales contracts; and
  - (5) assisting homebuyers with eliminating any credit problems that may prevent the homebuyers from purchasing the property.
- (c) **Eligibility requirements—** Deferred payment loans secured by second mortgages may be provided under the model program under this section if—
  - (1) the homebuyer assisted is a [first-time homebuyer](/usc/42/12704.md?p=14);
  - (2) the property secured by the second mortgage is a single-family residence and is the principal residence of the homebuyer; and
  - (3) the principal obligation of the deferred payment loan secured by a second mortgage does not exceed 30 percent of the acquisition price of the residence to the homebuyer.
- (d) **Payment terms—**
  - (1) **Period of deferral—** The payment of any principal and interest on a loan under this section shall be deferred for not less than the 5-year period beginning on the date of the acquisition of the residence by the homebuyer.
  - (2) **Interest rate—** The interest rate on the unpaid balance of a loan under this section shall be at least 4 percent.
  - (3) **Repayment period—** A deferred payment loan secured by a second mortgage shall be repayable over the 15-year period beginning at the end of the deferral period.
- (e) **Security—** A deferred payment loan assisted with amount[^1] provided under a grant under this section shall be secured by a lien on the property involved, which lien shall be subordinate to the first mortgage on the property.

## Footnotes

[^1]: So in original. Probably should be “amounts”.

## Source credit

(Pub. L. 101–625, title II, § 258, Nov. 28, 1990, 104 Stat. 4123.)