Federal agents also are examining whether a second affair Mahoney was having with a high-level official in his Florida district was behind his decision to push for federal emergency funds for her county, the official said.
The person spoke to The Associated Press only on condition of anonymity because of the sensitivity of the investigation. The person noted investigators would likely need both women's help to pursue the matter. The cases would be hard to prove without them.
Mahoney has called for a House Ethics Committee investigation of his own conduct and said he would be cleared of wrongdoing. House Speaker Nancy Pelosi also called for an investigation.
The FBI is looking into whether Mahoney hired the first mistress -- and put her on the federal payroll - so she wouldn't reveal their affair, the person said. The woman, Patricia Allen, has not returned repeated calls.
Mahoney, 52, who is married with a child, began his affair with Allen, 50, in 2006 while campaigning for Congress.
He won that year while promising to return morals and family values to Washington after Republican U.S. Rep. Mark Foley resigned amid revelations that he sent lurid Internet messages to male teenage pages who had worked on Capitol Hill. Foley was later cleared of criminal wrongdoing.
Mahoney hired Allen to work first for his congressional office, then his campaign. Campaign staff say she was later fired for performance issues, not because of the affair.
Allen then threatened to sue Mahoney for sexual harassment, they say. Mahoney reached a settlement to avoid a public airing, paying her and her attorneys $121,000. Mahoney's campaign staff says Mahoney paid the settlement to Allen with his own money, not with campaign funds or federal dollars.
Allen and Mahoney signed a confidentially agreement that prohibits them from discussing details.
The FBI is also looking into whether Mahoney helped Martin County secure a $3.4 million reimbursement from the Federal Emergency Management Agency for hurricane damage in exchange for sex with a county official in 2007, the federal law enforcement official said.
The funds were approved late last year. A Martin County news release at the time noted "Congressman Tim Mahoney was instrumental" in helping secure the funds.
The second affair was confirmed by a person close to Mahoney's campaign who spoke on condition of anonymity because he was not authorized to discuss the congressman's private life. Mahoney has not returned calls for comment and repeated attempts to reach the official have been unsuccessful.
His congressional staff notes that Mahoney lobbies for FEMA funding throughout his district, and that Martin County has received $43 million from FEMA since 2004. Mahoney didn't take office until 2006 and they say he did not show Martin County preferential treatment.
David Graham, the county's administration director, said the county began the effort to get the hurricane funds under Foley, before Mahoney took office. He said it was a three-year team effort, since the county was twice denied and only received the money on appeal to FEMA with help from Mahoney.
Mahoney is embroiled in a tough re-election challenge in a district that leans slightly Republican.
Though he has not directly addressed the Allen affair, he said in a statement earlier this week he takes "full responsibility for my actions and the pain I have caused my wife Terry and my daughter Bailey." He has not addressed the second affair.
Meanwhile, top Florida Republican Party officials called on Mahoney to resign Thursday.
"It's time to close the book on Tim Mahoney," said Republican Party of Florida Chairman Jim Greer. "I call upon Tim Mahoney to resign his office."
Mahoney has given no indication he plans to resign or leave the race.