Determine whether the borrower has a potential unmet need before requesting Detroit DPA funds

Purpose: This guide helps lenders quickly determine whether the borrower appears to have a documented financial gap that supports use of Detroit DPA funds.

Step 1: Start with the transaction need

Ask:

What funds does the borrower need in order to close and sustain the purchase?

Review the borrower’s:

• Required down payment
• Closing costs
• Prepaid items, if applicable under program guidance
• Minimum cash needed to close
• Any required reserves, if required by the first mortgage or program structure
• Additional principal payment necessary to meet the required housing ratio

Best practice: Base the need on the real transaction, not a rough estimate.

Step 2: Identify assistance to the borrower, outside of Detroit DPA

Document all available assistance sources, including

• Grants or subsidies from other programs
• Seller concessions
• Lender credits
• Other approved assistance sources

Important: Count all funds that are actually available to the borrower for the transaction.

Step 3: Compare the need to the available funds

Ask: 

Does the borrower have enough available funds to cover the required cash to close? 

If No: 

The borrower likely has an unmet need. Move to Step 4. 

If Yes: 

The borrower may not have an unmet need. Review whether Detroit DPA is still being requested for a documented gap that is allowed under program rules.

Step 4: Check whether the gap is real and documentable

Formula: 

(total eligible cash needed to close) - (other available funds) = (the potential unmet need) 

Best practice: The requested DPA amount should not exceed the documented unmet need unless program guidance specifically allows otherwise.

Step 5: Confirm the amount of Detroit DPA being requested

If the calculated potential unmet need is $25,000 or greater, it is likely that the City will consider $25,000 as the unmet need for purposes of Detroit DPA. 

• This reflects the program’s maximum assistance amount 
• The borrower must still demonstrate a real and documentable gap 
• The file must support the calculation, even if the gap exceeds $25,000 

If the potential calculated unmet need is greater than $0 but less than $25,000, the City will generally consider only the documented gap amount for Detroit DPA. 

• Lenders should avoid requesting the full $25,000 if the documented gap is smaller 
• The assistance amount should be right-sized to the transaction 
• Example: If the borrower has a $12,000 gap after all funds are accounted for, the DPA request should typically be $12,000, not $25,000. 

Important: This is a practical guideline for lenders. Always follow the most current City of Detroit program guidance.