Down Payment Assistance Programs

By
Mortgage and Lending with Your Tampa Bay Mortgage Source

Gift BoxOver the past couple years, homebuyers have been able to take advantage of Down Payment Assistance Programs, such as AmeriDream, Neighborhood Gold and many others. 

How do they work?  For example: a homebuyer is purchasing a home in Tampa for $200,000.  As a first time buyer, they didn't already have established credit scores, so their lender was able to qualify them for an FHA Government Loan.  However, this loan requires a 3% down payment, which our Tampa buyers don't have to put down on their new home.  With the down payment assistance program, the seller could "gift"the 3% down payment plus an administration fee, typically $395, to the program and the program would then give it to the buyer at the closing table.  It has been a great way for buyers to take advantage of "no down payment".

The downside to these programs is the The Department of Housing and Urban Development (HUD) is close to issuing regulation that will restrict down payment assistance programs on FHA single-family loans.  This regulation would prevent nonprofit groups (like AmeriDream or Neighborhood Gold) from cycling funds from the seller to the home buyer.

The biggest loss will be felt for young buyers who do not have established credit.  As it stands right now, we can approve a buyer with no credit score on the FHA program and use the DPA (down payment assistance) for the down payment. 

For first-time buyers who fall into this category and are looking to purchase a home in the next couple months, now is the time to get moving!  If you are a REALTOR and have a customer that is using a DPA program in conjunction with an FHA loan, please pass along this information before they miss a great opportunity.

Comments (21)

Eddy Martinez
Nationwide Funding Group - Highland Park, CA

Great info Lea. I hope that the regulation doesnt go through so these programs will be available to new home buyer prospects.

Eddy

Apr 19, 2007 10:11 AM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

Bob, there are so many programs changing daily, ANYONE who is on the fence (and is going with a "special" loan offering) should move!

Eddy, I agree.  With FHA programs, people with no scores can get into their first home with a GREAT interest rate, on a 30 year fixed and have no prepayment penalty.  If this goes through it will take away a good option.  We can only hope that FHA will move to a 100% program before they pass this ruling.

Apr 19, 2007 10:14 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland
The 100% FHA loan is the real answer.  The Down Payment Assistance programs merely shift the down payment costs to the seller.  That limits the homes available for buyers. 
Apr 19, 2007 10:36 AM
Anonymous
Michael

I disagree that DPA programs limit homes available for buyers.  What usually happens is that instead of a buyer taking down the seller 5% (average) of asking price, buyer pays full price and seller contributes 3%.  It's a definitate win-win-win-win.  Seller has a larger pool pool of buyers and makes more on the sale, Realtor makes more commission with the higher sales price, LO can service more clients and close more deals, buyer become a homeowner!

As a former seller, I love this program: http://www.PreferredProgram.org  (They gave me a free yard sign!)

Apr 20, 2007 02:38 AM
#5
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

When I was a realtor Liberty Gold was sending me info to put with my listings about DPA

I think they're great programs

I think some of the MyCommunity programs will help with that as they allow $500 min out of pocket and 6% seller concessions

Apr 20, 2007 03:14 AM
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!
ps... little blue box! did someone get something from Tiffany's recently??
Apr 20, 2007 03:14 AM
Eddy Martinez
Nationwide Funding Group - Highland Park, CA

Leah yes that would be great but FHA tends to move pretty slow when it comes to making those type of policy changes. But who knows anything can happen :)

Eddy

Apr 20, 2007 09:12 AM
Cyndee Haydon
Charles Rutenberg Realty - Clearwater, FL
727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes
Leah, great post - you're right now is the perfect time to buy if you're a first time homebuyer - everything is in your favor - but that can't last. Hope you get some calls from fence sitters! Aren't you offering a local seminar on this topic soon? 
Apr 22, 2007 03:17 AM
Michelle Rosser
Maximum One Realty - Union City, GA
Atlanta Real Estate-South Fulton & Fayette
Thanks Leah for the post. I was not aware about new regulations. I will definitely have to get my buyer to get off the fence and move forward with their first home.
Apr 22, 2007 03:55 AM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

**UPDATE**

The IRS has started implementing regulation on the Down Payment Assistance providers.  On 4/23/07, the IRS revoked ABC Housing, Inc of Orlando, FL and The Dream House Charity of Windsor, Ont.  This means these companies will no longer be able to offer down payment assistance through HUD (according to HUD's website). 

Apr 25, 2007 02:39 PM
Anonymous
EDNA REYES

I am trying to find a home for my kids and myself.  I have never bought a house on my own, but have been on two deeds.  One here in Tampa, FL and one in TN.  I don't know if I qualify for any 1st time buyers programs because of this.  Also, my credit score is not way up there, but getting better, I've been working on ways to raise my score since September of last year; but I am making really good money right now and I know that I would be able to hold my own.  Part of my problem is trying to get 100% finanacing, so if I qualify for a down pymt grant, that would be awesome.  Hope you can help me.  Thank you.

Apr 27, 2007 07:12 AM
#12
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage
Edna, I would be happy to help and give you some more information about what might work for you.  Please email or call me directly and we can chat a bit more.  Office is 813-643-8430 or my email is LRoss@AmeriFirst.com.
Apr 30, 2007 02:48 AM
Jack Haydon
Charles Rutenberg Realty - Clearwater Beach, FL
Clearwater Beach Condos - Real Estate Homes for Sale
Leah - you are right - now is the time to buy if you need assistance because we're finding sellers are also motivated to help. Your patience and experience make you a great person to work with - I hope buyers will take advantage of the opportunities that exist right now. 
May 03, 2007 04:52 PM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

Great point Jack, motivated Sellers are a key part of the program!  Thanks for the comments.

May 08, 2007 03:07 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
Yes  and there are many motivated sellers right now.We have to convince buyers that this is a good time to buy.
May 08, 2007 06:45 AM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage
In all honesty, we need to get the media involved...they are the one's that buyers listen to, wrong way to go, but if we could get some outlet to see this is a good market...we would be flooded!
May 08, 2007 08:33 AM
Katrina Madewell
Charles Rutenberg Rlty- More than 5,000 agents(813) 777-1196 - Tampa, FL
Tampa FL Homes for sale | Tampa Bay - (813) 777-1196
this was a nice post leah.. great article
May 08, 2007 10:36 AM
David Yeoman
Mortgage Intelligence Inc. (David Yeoman) - Barrie, ON

Any Canadian Realtors that are looking for more information regarding LOW or NO down payment programs, I invite them to either review my recent post 100% Mortgage Program just got better.....fully discounted rates! or visit our Website at: http://ontariomortgageteam.com/i107.aspx

 

May 11, 2007 12:36 AM
Jack Haydon
Charles Rutenberg Realty - Clearwater Beach, FL
Clearwater Beach Condos - Real Estate Homes for Sale

Hi Leah,

If i read a recent HUD article correctly, HUD may be funneling some funds to buyer down payment assistance. Is that correct?

May 13, 2007 04:00 AM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage

**UPDATE ON DOWN PAYMENT ASSISTANCE PROGRAMS** - I have more information now on SHIP funds as well as specific down payment assistance offered through the City of Tampa and St. Pete...email me off line for more info at LRoss@AmeriFirst.com 

Also, Hillsborough County is out of SHIP funds until July/August.

Jun 04, 2007 12:07 PM