At the time of closing, there is a lien filed against the property for the amount of the forgivable loan. The loan is forgiven over a five-year period, 20% each year. The borrower must stay in the property for the first full five years of the mortgage for the entire amount to be forgiven. As long as the borrower has occupied the property as their primary residence for the first 5 years, at the end of the 5th year, the lien is released.