How would you look at a home loan program from a nonprofit like a university? The specific loan is due in 10 years and defers all payments until maturity. The interest calculation is calculated at 2.2% per year but is forgiven if the borrower still works for the nonprofit.

It seems ATR looks through favorable and temporary loan features ( ARMs, teasers, I/O’s, Balloons) and clearly requires a payment be calculated that considers the interest rate/principal balance/term, and requires a payment to be included in the analysis that “ fully repays the loan amount over the loan term”. Are there any exceptions for down payment assistance from non profits or government entities?

When underwriting the first lien. Would you just use the principal balance of the second loan over a 10 year amortization schedule? Would you be able to use no payment because it is deferred so long? How would you determine what payment to use when approving the borrower for a first mortgage?