Over 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.