Changes to FHA Down Payment Assistance Programs like Nehemiah

There has been a lot of discussion in the news about changes to "gifting" programs for down payment assistance to homeowners such as the Nehemiah program.  In order to clarify this for those of you who are considering down payment assistance or know someone who is, following is a recent article by the California Association of Realtors that sheds some light on the matter. 

The main points to keep in mind are:

1. The change mainly eliminates the ability of the Seller (or anyone who benefits from the sale of the home) to contribute funds towards the down payment or a "gifting" program.
2. The change takes place as of October 1, 2008

So, if you or anyone you know are considering taking advantage of this program that allows you to purchase a home with little or no downpayment, please contact us immediately as you must close escrow before October 1st. 

Here are some comments by the California Association of Realtors:

• The Housing bill being considered in Congress this week does NOT eliminate all down payment assistance programs from eligibility for FHA insurance. The legislation would only prohibit seller-funded down payment assistance, or assistance from someone who financially benefits from the transaction.
• Loans that receive down payment assistance perform less well than loans without down payment assistance. A recent
• Studies showed that homes sold using this type of down payment assistance typically sold for 2-3% higher than comparable homes without down payment assistance.

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