What Employer Assisted Homeownership Benefits Are
Employer Assisted Homeownership (EAH) benefits are financial assistance programs that employers offer to help their employees buy homes. These programs can provide money for your down payment, closing costs, or both.
The key requirement is that your employer must have an established, ongoing, and documented benefit program. This isn't a one-off favor from your boss. The company needs written policies that spell out who qualifies, how much assistance they provide, and what the terms are.
Say you work for a hospital system that offers $10,000 in down payment assistance to nurses who commit to working there for five years. That's an EAH benefit. Or maybe your tech company provides a forgivable loan that gets reduced by 20% each year you stay employed. That works too.
Types of Employer Assistance Programs
Grants and Gifts
The simplest form is a straight grant or gift from your employer. You get the money and don't have to pay it back. These follow the same rules as gifts from government agencies under [[5501.4]], but your employer doesn't face the same restrictions that prevent government agencies from being involved in the mortgage transaction.
Your company could give you $15,000 toward your down payment with no strings attached. As long as it's part of their documented employee benefit program, Fannie Mae accepts it.
Individual Development Accounts
Some employers participate in Individual Development Account programs. These are special savings accounts where your employer (or a nonprofit) matches the money you save for a home purchase. The matching funds follow the IDA rules in [[5501.3(a)]] and [[5501.4(b)]].
You might save $5,000 over two years, and your employer matches it dollar-for-dollar, giving you $10,000 total for your home purchase.
Unsecured Loans
Your employer can provide an unsecured loan for your down payment or closing costs. These loans can be fully repayable, have deferred payments, or be forgivable over time.
The loan terms matter for your debt-to-income ratio. If you have to start making payments right away, those payments count against your qualifying ratios. But if the payments don't start until the 61st month after closing (5 years), or if you only repay when you sell the house, the lender can exclude those payments from your debt-to-income calculation.
Here's where it gets specific about employment protection. The loan can only require full repayment if you quit your job or get fired for cause. If your employer lays you off, eliminates your position, or terminates you due to long-term disability, you keep the favorable loan terms.
Secondary Financing
Your employer can provide a second mortgage that follows all the normal secondary financing rules in [[4204.1(a)]] and [[4204.1(b)]]. This second loan can help you avoid private mortgage insurance by reducing your first mortgage to 80% loan-to-value.
The same employment protection rules apply. You can't be forced to repay the full amount just because you get laid off or become disabled.
Affordable Seconds
Employers can also provide Affordable Second mortgages under [[4204.2]]. These are special second mortgages with favorable terms designed to help moderate-income borrowers.
Required Documentation
You need two main categories of documentation for EAH benefits.
First, get a copy of your employer's written benefit program. This document must show the amount of assistance available and spell out all the program terms. A simple letter from HR won't cut it. You need the actual policy or program guidelines that show this is an established benefit, not a special deal just for you.
Second, provide evidence that you actually received the funds. This could be bank statements showing the deposit in your account, or the funds appearing on your closing disclosure statement if your employer sends the money directly to closing.
Your lender will also need the standard gift letter documentation if the assistance is structured as a gift, or loan documentation if it's set up as employer financing.
Why These Rules Exist
Fannie Mae created these guidelines to prevent conflicts of interest while still encouraging legitimate employer homeownership programs. The rule that employers can't be interested parties prevents situations where your boss is also your real estate agent or mortgage lender.
The employment protection requirements ensure that employees aren't trapped in bad job situations just to keep their housing assistance. If your company eliminates your position, you shouldn't lose your home because of loan acceleration clauses.
The documentation requirements prove that these are real employee benefits, not disguised seller concessions or other prohibited arrangements that could inflate home prices.
Common Complications and Gotchas
The biggest issue is employers who don't have proper documentation. Your boss can't just decide to help you buy a house. The assistance must come from an established program with written policies.
Watch out for timing issues with loan payments. If your employer loan requires payments starting in year four, those payments will count against your debt-to-income ratio and might prevent you from qualifying for the mortgage amount you want.
Some employers try to structure assistance as salary advances or bonuses rather than formal homeownership benefits. These arrangements often don't meet Fannie Mae requirements and can create tax complications.
Be careful about employment termination clauses. Some employer programs have broad acceleration clauses that could force immediate repayment if you leave for any reason. Fannie Mae only allows acceleration for voluntary termination or termination for cause.
If your employer is involved in the real estate transaction in any way - as the seller, real estate agent, or mortgage lender - the assistance likely won't qualify as an EAH benefit. The employer must be truly independent from the transaction.
References
For the official guidelines, see 5501.5: Employer Assisted Homeownership (EAH) Benefit in the Fannie Mae Selling Guide.
Mortgage guidelines change. Stay current.
Fannie Mae and Freddie Mac update their rules several times a year. Get notified when changes affect your mortgage eligibility, required documents, or loan terms.
No spam · Unsubscribe anytime
Original Freddie Mac Guideline Text
This section contains requirements related to:
(a)
General requirements
An Employer Assisted Homeownership (EAH) Benefit may be used as a source of funds to qualify the Borrower if the terms of the EAH Benefit meet the following requirements:
The EAH Benefit is provided to an employee from the employer pursuant to an established, ongoing and documented employer benefit program, provided:
The employer is not an interested party (as described in
); and
The funds were not obtained from an interested party either directly or through a third party
The Mortgage is secured by a 1- to 4-unit Primary Residence
(b)
Types of benefits
The EAH Benefit may be any of the following types of benefits meeting the requirements in the table below:
Requirements based on type of EAH Benefit
Grant
See requirements for gift or grant from an Agency in
Section 5501.4
.
With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply.
Individual Development Account (IDA)
See requirements for matching funds for IDAs in
Sections 5501.3(a)
and
5501.4(b)
.
With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply.
Unsecured loan
An unsecured loan may be fully repayable, deferred payment or forgivable. The source, terms and conditions must be documented on
Form 65, Uniform Residential Loan Application
.
Proceeds from an unsecured loan that is an EAH Benefit may be used to fund all or part of the Down Payment or Closing Costs. The terms of the EAH Benefit may not require repayment in full unless either:
The Borrower terminates their employment for any reason
The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force
If the EAH Benefit is fully repayable, the required monthly payment must be included when calculating the monthly debt payment-to-income (DTI) ratio. However, if the monthly payment of principal and interest or interest only begins on or after the 61
st
monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio.
Section 4408.1
for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program.
Secondary financing
Secondary financing may be fully repayable, deferred payment or forgivable and must meet the secondary financing requirements in
Sections 4204.1(a)
and
4204.1(b)
.
The terms of the EAH Benefit may not require repayment in full unless either:
The Borrower terminates their employment for any reason
The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force
If the monthly payment of principal and interest or interest only begins on or after the 61
st
monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio.
Section 4408.1
for requirements when an EAH Benefit is used as a source of funds to qualify for a Mortgage made pursuant to an employee relocation program.
®
An Affordable Second may be fully repayable, deferred payment or forgivable, and must meet the Affordable Seconds requirements of
Section 4204.2
.
With respect to the subject Mortgage, the requirement that the Agency must not be the Seller or have participated in any aspect of the Mortgage origination process and must not be affiliated with, under contract to or financed (directly or indirectly) by the Seller or any party that participated in the Mortgage origination process does not apply.
The terms of the EAH Benefit may not require repayment in full unless either:
The Borrower terminates their employment for any reason
The employer terminates the Borrower’s employment for any reason other than long-term disability, the elimination of the employee’s position or reduction in force
If the monthly payment of principal and interest or interest only begins on or after the 61
st
monthly payment under the First Lien Mortgage or if repayment of the loan is due only upon sale or default, the amount of the monthly payment may be excluded from the monthly DTI ratio; otherwise, the required monthly payments must be included in calculating the monthly housing expense-to-income ratio.
(c)
Documentation requirements
In addition to the documentation requirements for specific benefit types, the following requirements must be met:
EAH Benefits must be documented with a copy of the employer benefit program that provides the amount of the benefit and the terms of the program
Evidence of receipt of the EAH Benefit must be provided (e.g., funds on deposit in Borrower’s account or funds reflected on the Settlement/Closing Disclosure Statement)
(d)
Investor Feature Identifier
valid value “D25” when delivering a Mortgage with EAH Benefits. See
Section 6302.29
for more information.
