Real Estate Blog - Jan 1, 2009 the NEW minimum downpayment for an FHA loan will be 3.5 Percent

In addition, this article also talks about FHA limits falling back to approximately $625,500 in the highest priced housing markets. Merri Perry previously mentioned in a couple of her blogs about the October 1, 2008 deadline for down payment assistance programs being cut off in the FHA program and what we can do to help save Nehemiah and others. This article also confirms that fact, and I quote: "Organizations such as Nehemiah, Incorporated and Ameridream will no longer be able to provide seller-funded gifts in connection with FHA mortgages." Looks like I am going to have to get some of my buyers to stop dragging their feet and use those letters of authorization. I wonder if Fannie and Freddie are going to stop accepting these gifts as well...

Posted by C Tann-Starr on 08/11/2008 05:47 AM

Comments (25)

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25 Comments on Jan 1, 2009 the NEW minimum downpayment for an FHA loan will be 3.5 Percent

AUG

2008

Thanks for the heads up C - Hope today is a better day than yesterday.

Paddy, my weekend was shot. I hope today is an improvement. I'm really looking for some serious down time. I'm exhausted... :-(

Joey took off today so I may be able to free my schedule by 3:30. I will call you later. :-)

The buyer pool is dwindling, could this be a bad thing?

AUG

2008

Don, I honestly don't know. It changes daily, too close to call... :-)

C - wonder if we will get a false bounce of people scrambling to get DPA before October 1 and then a big let down afterwards. Another possible unforseen consequence of government action.

Mike, I was thinking about that as well. They are going to have to use them or lose them (or just not go FHA). Hmm...

AUG

2008

I was on Nehemiah's website this morning, and they have a whole website dedicated to fighting this October 1 deadline. I was able to easily create a letter that was then automatically emailed out to my congress reps.

Talk about "possible consequences of government action," it would be very sad for programs like this to become extinct. My mom is a real estate agent, and it is truly scary to think about how far reaching the consequences could be!

This is what the website said about the new bill that has been proposed: "A bill introduced by Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays on July 31, 2008, that would reinstate SF-DPA. If passed and signed into law, the FHA Seller-Financed Reform and Risk Based Pricing Authorization Act of 2008 (HR 6694) will allow downpayment assistance to continue indefinitely."

That's the Bill I want to support!

WorkingMom08, I hope they find a way to save these programs. I will gladly support any legislation that would save them. Thank you for the update. :-)

AUG

2008

Hi...just thought you should know that there is a new website dedicated to saving downpayment assistance. The address is www.DPAGroundswell.org. This site contains an area where you can email comments/letters to your elected officials letting them know you want to help save DPA...FYI

Thank you, workingmom08, I shall go check it out. I appreciate you sharing this information. :-)

AUG

2008

No problem! I figure it'll be good for me, good for buyers, and good for the industry if these programs stay alive! Of course, that's just my opinion, but still...

Workingmom08, I agree with you. Any program that can assist buyers into getting into a home should not be tossed aside if it is really making a difference for people. These programs have and I believe destroying their ability to gift a down payment when everyone else can still gift a down payment (e.g. my mom and dad to me, or me to my brother) is ridiculous. It smacks of a handful of people legislating a personal bias. I can get it from grandpa, but not from a seller or a non-profit program. Duh?

SEP

2008

Amen to that! I wish I was seeing more of this kind of response. Some of the comments I read on other sites are so hypocritical! People in the industry that you know have used DPA, but now are so negative and calling it fraud! I personally know of quite a few people who have defaulted on their loans and not one of them used DPA...I used it, and I have owned my home for 8 years. I don't know where the statistics are coming from about people defaulting because they used DPA...I just don't see it...

Workingmom08, people default because they have financial issues. Period. People who try and contribute it to anything other than a current financial crisis are blowing smoke and mirrors. You can open your Bible and find stories of people defaulting on their real estate so to suddenly blame a small group of programs that are self funded and working is a load of B.S. and I am so tired of people being afraid to call a spade a spade. You can do it without stubbing your toe on one. I want these programs restored. I am not the only one who feels this way. This market is tough enough as it is and anything that can help people get into a home should not be singled out and destroyed because some butt-heads can't figure out how to gain control over the money, so they would rather lobby to take it away than see these programs succeed (and embarrass their supported programs which are not working as well).

SEP

2008

You're awesome! I like how you think!

Workingmom08 thank you. I have been enjoying our conversation. Looking forward to hearing more from you. Enjoy your evening. Regards, Carolyn. :-)

SEP

2008

I have an update: check out this article that talks about a possible compromise between HUD and DPA! http://www.inman.com/news/2008/09/9/congress-weighs-reprieve-seller-funded-gifts. Everyone who hasn't taken the opportunity to visit DPAGroundswell.org, please do so and send a message to your elected officials. I think if we keep letting our voices be heard, we can truly save Down-payment Assistance Programs in America!

Outstanding! Thank you, Workingmom08. :-)

SEP

2008

Great news! H.R. 6694 has been passed by the House Financial Services Committee, positioning the bill for a floor vote in the coming days!

SEP

2008

Workingmom08, that is very good news, indeed. Let's see how this progresses... :-)

Hi, I heard from one of the lenders I use often (she is a vice-president with AmeriSouth Mortgage) that the change to 3.5% FHA downpayment will take place on October 1, 2008. Also, I never knew that FHA downpayment assistance programs such as Nehemiah, Ameridream, etc. were available for other types of loans as well. Interesting.

I've been keeping an eye on this because I am working with two buyers who have yet to use their grants. :-)

SEP

2008

I'm wondering if the private investment banks will still use this. The programs wire the money into escrow for the title companies to close. I do not believe private funding options will be affected by what is going on but I am trying to find out. I have to get my buyers to get a move on making a home selection or they may lose out on a great opportunity.

SEP

2008

The clock is ticking, but it hasn't run out yet! We are keeping our fingers crossed...even though the deadline is creeping up quick, there is still hope for downpayment assistance programs! I hope you have all taken the opportunity to speak out in support of DPA! My heart goes out to the buyers who will suffer if we fail to save this valuable program!

Workingmom08, there are a lot of us in the industry that have been contacting people about this. We can only pray and wait to see what the elected officials will do. I have hope...

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