Most Active Rain agents and readers know that FHA eliminated seller funded down payment assistance in 2008. There are mixed views about this but the result is the same: less sales. What many do not know (and some do not want to accept) is the reason FHA wanted to end seller funded DPA: they were gunning for 100% loans and were shot down. In the mean time they won their campaign to have seller funded DPA eliminated. Caught in the cross-fire was a small array of potential home-buyers who are not permanent renters thanks to the lobbying efforts of the largest apartment owner's lobby in the world. But that is the part that doesn't come out in the headlines because they are "dirty big secrets".
Here is something else that doesn't come out in the headlines: down payment assistance is still available for FHA loans and for the agent with the know-how to get it done you can help many people get into a new home that otherwise would not have. Most of you know that the down payment can be a gift from a family member but many do not know that can also come from the employer. Even more than this most people do not know this can be a LOAN and it is not restricted by FHA guidelines like seller-funded DPA was.
A sharp, enterprising, act-together, service oriented person like you will be able to do this: once you have discovered the buyer can qualify for an FHA loan but does not have the required 3.5% down payment ask them if anyone in their family can gift them the down payment. If not ask if anyone in the family can loan them the down payment. If still the answer is no then ask if the employer may be interested in a gift as an advance or a loan.
Here is where the "did" get's separated from the "did not": Ask if the buyer would mind if you, as the real estate agent, contacted the employer and asked about a loan because of all the good reasons this will make the buyer a better employee. Trust me on this -it can work. Now don't go calling without the buyer's permission first. Tell the employer they can contact the same closing attorney the lender will be using and they can draw up and file the 2nd note right along with the first at closing.
Don't know how it works? If you are in the southeast or anywhere that I can lend I will help you.
As always I hope this helps you deliver better service and if you have any questions never hesitate to ask.
THE OPINIONS IN THIS COMMENTARY ARE STRICTLY KEN COOK's PERSONAL OPINION AND NOT REFLECTIVE ON ACTIVE RAIN, NOVATION MORTGAGE, or ANY SPONSOR OF THIS WEBSITE.
EDUCATION BEATS LEGISLATION EVERY TIME. Get your clients, friends and family members to a LENDER RUN home mortgage seminar as soon as possible.
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5 Comments
on Agent Tips Countdown: #28 FHA Downpayment Assistance
DEC
01
2008
Good info. In addition to the family and employer down payment assistance, buyers can also get down payment assistance from churchs or non-profit community groups.
I spend a lot of time looking for money. It's not something I do because I enjoy it. I do it because it helps our agents sell homes.
Lenn - thank you. (Note to the readers: she is, as always, correct.) Many municipalities and states also offer down payment assistance programs in addition to churches and other legitimate charitable community organizations.
The state of Nevada and many of our cities and counties offer bonds and grants. We currently have 30+ grant and bond programs that are sitting in our hot little hands.
This is another excellent idea for down payment assistance! Thanks Ken
Ken - Excuse my ignorance - but I thought any down payment assistance could not be a loan. We do have Indiana Housing here which helps first time homebuyers with up to $3500.00 in DPA as a loan, but I wasn't aware a family memer or employer could also contribute as a loan. Thanks for the great info.
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Good info. In addition to the family and employer down payment assistance, buyers can also get down payment assistance from churchs or non-profit community groups.
I spend a lot of time looking for money. It's not something I do because I enjoy it. I do it because it helps our agents sell homes.