Down Payment Assistance Programs – are they at an end?

On July 30th the President signed The Housing and Economic Recovery Act of 2008.  This bill will not allow FHA to insure any mortgage where the down payment comes from and 3rd party directly or indirectly.  That means programs like AmeriDream, and Nehemia will no longer be able to assist buyers in getting 100% financed homes.

Currently, and until October of this year, if you are purchasing a home and getting your financing thru FHA, you can have the seller contribute your 3% down payment, plus the processing fee, to a down payment assistance program, as well as have the seller contribute to your closing costs, allowing a home buyer to purchase with no money down. 

In plain English, if you, or anyone you know is considering purchasing a home, and requires help with the down payment, they will need to purchase a home by October first of this year.  After October, you will have to purchase a home the old fashion way.  With money down. 

You will still be able to have the seller contribute to your closing costs, not the down payment. 

Here is the Summary of the Housing & Economic Recovery Act of 2008.

  • One more thing to be aware of is the down payment required for an FHA loan on October first will go from 3% to 3.5%
  • In Maricopa county (Phoenix area) the FHA loan amount as of today is $346,250