Definition
Loan that is forgiven (cancelled) if borrower meets conditions, often used for down payment assistance.
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Forgivable loans require no repayment if conditions are met. Conditions typically include occupancy and repayment period. If borrower leaves property before period ends, loan must be repaid. Forgivable loans are more accessible than traditional loans.
Pro Tip
Understand forgiveness conditions; failure to meet terms requires loan repayment.
Example
Forgivable loan providing $20,000 down payment assistance forgiven after 5 years of occupancy.