Los Angeles buyer guide
What Happens If You Sell or Refinance Before 5 Years on Zillow's Down Payment Assistance?
The short answer
For a Los Angeles buyer, Zillow says its down payment assistance comes due in full if you move out, sell, or refinance before year five. As of October 30, 2026, the assistance is a second mortgage that may be forgiven after five years of on-time payments and owner occupancy if program requirements are met (Zillow Home Loans release, checked October 30, 2026).
Justin Borges of The Borges Real Estate Team at eXp Realty (DRE #01940318, (213) 262-5092) helps you test a purchase against the five-year hold before you write the offer. Zillow says moving out, selling or refinancing before year five makes the assistance due in full. Its published terms describe forgiveness after five years of on-time payments and owner occupancy, subject to program requirements.
Test your five-year plan
Text Justin how long you expect to stay and he will help you test it against the five-year hold.
What triggers repayment before five years?
As of October 30, 2026, Zillow's release says the assistance comes due in full if the buyer moves out, sells, or refinances before year five. The assistance is a second mortgage with no interest and no monthly payments under the published terms. Zillow describes forgiveness after five years of on-time mortgage payments and owner occupancy, subject to program requirements (Zillow Home Loans release, checked October 30, 2026).
Moving out is a separate published trigger from selling. A job relocation or a family change may lead you to leave a Los Angeles home even if you intend to keep it. Check how your signed documents define occupancy and when repayment is due. Do not assume a temporary absence, a rental arrangement, or a hardship receives an exception.
The published description does not establish a year-by-year forgiveness schedule. Ask whether forgiveness occurs all at once at the five-year point, how the date is calculated, and what evidence confirms the second lien has been released. The lender or servicer can explain the documents, and a California attorney can advise on a disputed interpretation.
| Possible change | Question before buying |
|---|---|
| Sell the home | What payoff would escrow collect? |
| Refinance | When is repayment due and from what funds? |
| Move out and keep the home | How do the documents define occupancy? |
Under the published terms, the assistance is due in full if you sell, refinance or move out before year five (Zillow Home Loans release, checked October 30, 2026).
Have a question about your own situation? Text (213) 262-5092
How much could you owe if you sell?
Consider a hypothetical Los Angeles purchase at $700,000 with an appraisal equal to the price, maximum assistance and no additional down payment. This illustration is not an offer or a typical result. As of October 30, 2026, Zillow describes assistance of up to 3.5% of the lesser of purchase price or appraised value (HousingWire, Zillow Home Loans launches FHA down payment assistance loan, checked October 30, 2026). HUD explains that eligible down payment assistance can provide the required investment (HUD, FHA Myths v Facts, checked October 30, 2026).
| Hypothetical item | Amount or condition |
|---|---|
| Purchase price | $700,000 |
| Initial first mortgage | About $675,500 |
| Assistance second mortgage | $24,500 |
| Initial total with 1.75% upfront FHA premium financed | About $711,821 |
| Early exit | Assistance due in full if you sell, refinance or move out before year five |
The financed premium and total are hypothetical and are our own arithmetic, using the 1.75% upfront premium in HUD Mortgagee Letter 2023-05 (checked October 30, 2026). A sale at the purchase price is a planning scenario, not a forecast. The first mortgage payoff, selling expenses and assistance payoff reduce proceeds; at maximum assistance, a sale at the purchase price can leave no proceeds and you may need cash for selling costs. Principal paid down, additional purchase funds and actual costs affect the result. An escrow net sheet can show the effect of different sale prices and payoff figures.
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The assistance covers the down payment rather than closing costs (Zillow Home Loans program page, checked October 30, 2026). Plan for purchase costs and the possibility that the second mortgage is due in full before year five.
Test your five-year plan
Text Justin how long you expect to stay and he will help you test it against the five-year hold.
What if rates fall and you want to refinance?
As of October 30, 2026, Zillow's published terms say refinancing before year five makes the assistance due in full (Zillow Home Loans release, checked October 30, 2026). For a Los Angeles home, compare the payoff, closing costs and time you expect to keep the new loan when considering a refinance. The published description does not settle every forgiveness timing detail, so check the date and lien release in your documents. Refinancing before year five triggers full repayment.
Test your five-year plan
Text Justin how long you expect to stay and he will help you test it against the five-year hold.
What if work or family requires a move?
A job relocation or family change can mean leaving a Los Angeles home you intended to keep. Zillow's release treats moving out before year five as a repayment trigger even when no sale is mentioned (Zillow Home Loans release, checked October 30, 2026). The published materials do not establish a hardship exception; check what the occupancy language and any exceptions in your documents say.
If you keep the home, consider the assistance payoff alongside the continuing mortgage payment, insurance, property expenses and cost of housing elsewhere. An attorney can review unclear occupancy language. Moving out before year five makes the assistance due in full under the published terms.
What should you ask before signing?
Ask for the assistance note, deed of trust, occupancy requirements and forgiveness terms before deciding whether the hold period fits your plans. A California real estate attorney can advise you on their legal effect. Make sure any verbal explanation matches the documents you will sign.
- What exact date starts the five-year period, and what date completes it?
- Is forgiveness all at once at the end, or does the agreement provide another schedule?
- What counts as moving out, and does the agreement describe exceptions?
- What happens if a payment is late? The published description does not answer that question.
- How is a payoff requested for a sale or refinance, and who receives the payment?
- How and when will the lien release be documented if the loan is forgiven or repaid?
- What cash, closing costs and reserves are needed under the proposed first mortgage?
Rather talk it through? Call (213) 262-5092
HUD describes FHA financing as a loan with a down payment that can be as low as 3.5% of the purchase price (HUD, Loans, checked October 30, 2026). HUD also identifies second mortgages and down payment assistance among acceptable sources of the minimum required investment in most cases (HUD, FHA Myths v Facts, checked October 30, 2026). Those general FHA rules do not replace the specific assistance documents.
Compare an illustration of your initial cash required and early-exit payoff with your expected stay. Check the five-year start date, occupancy trigger and lien release in the assistance documents.
Test your five-year plan
Text Justin how long you expect to stay and he will help you test it against the five-year hold.
How do you decide whether the hold period fits?
Start with your likely plans for a Los Angeles home, then test what happens if those plans change. A buyer who expects to stay and can afford the payment still needs a contingency for an unexpected move. A buyer expecting a shorter stay may value financing with different repayment terms, even if it requires more cash at closing.
As of October 30, 2026, California is not on Zillow's excluded-state list, but neither published Zillow source names California as included. Zillow says its loan officer confirms eligibility; text Justin your expected timeline to compare your home-buying options. The assistance is tied to a Zillow Home Loans FHA first mortgage (Zillow Home Loans program page, checked October 30, 2026). Zillow's release lists no income cap, while buyers still must qualify for the full monthly payment (HousingWire, Zillow Home Loans launches FHA down payment assistance loan, checked October 30, 2026). Compare Loan Estimates from more than one lender.
HUD notes that FHA's minimum investment may come from eligible assistance (HUD, FHA Myths v Facts, checked October 30, 2026) and describes FHA down payments as potentially as low as 3.5% of the purchase price (HUD, Loans, checked October 30, 2026). I can help you compare home-buying options and write an offer. I am a licensed real estate agent, not a lender. Test your expected stay and a possible early move against the five-year hold.
Frequently asked questions
Does the assistance have monthly payments?
Zillow describes the assistance as a second mortgage with no interest and no monthly payments under its published terms as of October 30, 2026. That does not mean the obligation is immediately forgiven. Budget for the first mortgage and other costs of ownership.
Can I rent the home instead of selling it?
Zillow says moving out before year five triggers repayment in full. Keeping title does not itself avoid that trigger; check how your signed documents define occupancy.
Will an early payoff include interest?
Zillow describes the assistance second mortgage as having no interest under the terms published as of October 30, 2026. Review your note and actual payoff statement for applicable amounts and procedures.
Have a question about your own situation? Text (213) 262-5092
Is forgiveness automatic on the anniversary?
Zillow describes forgiveness after five years of on-time mortgage payments and owner occupancy. Check how the period is measured and the lien release documented. Zillow's published sources do not address taxes. The IRS says canceled debt is generally taxable unless an exclusion applies, so ask a tax professional how forgiveness would be treated for you ( IRS, Topic no. 431, checked October 30, 2026 ).
What if the appraisal is below my purchase price?
Zillow describes the assistance cap as a percentage of the lesser of purchase price or appraised value. A lower appraisal can therefore reduce the assistance amount from the amount you expected. Get updated figures from your lender, and discuss your purchase contract and options with Justin before proceeding.
Test your five-year plan
Text Justin how long you expect to stay and he will help you test it against the five-year hold.
Sources
- FHA Myths v Facts, HUD, June 2025 (hud.gov). Checked October 30, 2026.
- Loans, HUD (hud.gov). Checked October 30, 2026.
About the author
Justin Borges
REALTOR® | CA DRE #01940318
Justin writes LA Metro Home Finder’s guides to 30+ communities across the San Gabriel Valley, Northeast LA, and greater Los Angeles, and has closed $200M+ in career sales with a 106% average list-to-sale ratio.
Justin has held an active California DRE salesperson license since October 2013. View Justin’s author profile.
This guide is educational and is not legal, tax, title, lending, or insurance advice. Contract forms, statutes, and lender rules change. Confirm the terms that apply to your sale with your escrow officer, title officer, lender, or a California real estate attorney.
