If you are struggling to save for a down payment, there are two government-run programs that are designed to help. The Federal Housing Administration (FHA) offers mortgage insurance that allows qualified buyers to purchase a home with a 3% down payment, and that down payment may be entirely a gift. Also, the U.S. Department of Veterans Affairs has a home-loan guarantee program that will help military veterans buy a home with no down payment. You may also be able to find a down payment program that offer grants and low-interest deferred-payment loans and are run by state or local housing authorities.
There are also down payment assistance programs offered by private organizations, such as Nehemiah Corp. and AmeriDream, two of the largest. These organizations convert money contributed by the seller into the buyer’s down payment and assist with seller concessions. They use the seller’s equity to fund a grant which allows the buyer to buy with no money down.
The FHA has tried, unsuccessfully so far, to ban using private down payment assistance programs in conjunction with FHA loans, since FHA-insured loans that used these programs had a higher rate of default and foreclosure than loans that didn’t use private assistance, according to an FHA study. “FHA loans made to borrowers relying on ‘seller-funded down payment assistance’ go to foreclosure at three times the rate of loans made to borrowers who make their own down payments,” stated FHA Commissioner Brian Montgomery in a May 2008 speech. Alternatively, the private down payment assistance industry believes strongly that the government shouldn’t restrict access to home ownership.
Talk to your bank or lender today to find out which programs or loans are right for you. You may be surprised at what you can do. There are some great homes at great prices on the market today, and we'd love to help you start looking for the right home today!
Labels: ameridream, assistance programs, down payment, FHA, nehemiah, VA
