It's official, as of Oct. 1 2008, the beloved days of 100% financing are now dead. President Bush signed historic legislation on July 30th that boosts mortgage finance companies Fannie Mae and Freddie Mac and authorizes a $300 billion expansion of Federal Housing Administration loan guarantee programs. The mortgage industry has seen significant changes over the past year, and with the demise of the sub-prime market, the last alternative to 100% financing was securing an FHA loan utilizing their down payment assistance programs. Some examples of these non-profit organizations include: Nehemiah, AmeriDream etc.
The FHA allowed these home buyers to accept gifts of down-payment money from nonprofit organizations. Here's the loophole: Since the 1990s, the FHA had allowed home sellers to "contribute" money to nonprofit's, and for the nonprofit's to then turn around and "donate" the money to home buyers. In effect, sellers could fund buyers' down payments, which was a no-no, but the practice was technically legal because the money was shuttled through nonprofit's. The nonprofit's collected service fees from sellers.
So some of you may be asking yourself, "How does this new housing legislation effect me?" Well it means as of Oct. 1 2008 down payment assistance programs are no longer available for use. This bill increases the minimum down payment to obtain an FHA loan from 3% to 3.5%. Until July 2009 first time home buyers will qualify for a 10% tax credit (up to $7500). The bill also introduces a "risk based" mortgage insurance valuation system instead of the old flat rate 1.5% mortgage insurance premium tacked onto your mortgage loan. You can read the entire H.R. 3221 bill here.
Below are the FHA loan limits in the Greater Houston area and surrounding counties.
| County Name | Single Family | Duplex | Tri-plex | Four-plex |
| Montgomery | $271,050 | $347,000 | $419,400 | $521,250 |
| Harris | $271,050 | $347,000 | $419,400 | $521,250 |
| Galveston | $271,050 | $347,000 | $419,400 | $521,250 |
| Fort Bend | $271,050 | $347,000 | $419,400 | $521,250 |
| Liberty | $271,050 | $347,000 | $419,400 | $521,250 |
| Brazoria | $271,050 | $347,000 | $419,400 | $521,250 |
FHA is still one of your best bets out there for someone who is looking for a minimal down payment. There my be some better options out there for the individual or family who can afford to put down 5%-10% towards their down payment. Contact The Icon Group today or view our buyer center or fill out our loan application at our mortgage center at www.houstonicon.com.
It's not too late to get in a qualify for these down payment assistance programs but time is running short. Contact The Icon Group today!
Comments(0)