Down Payment Assistance Programs: The Facts

Many real estate agents and mortgage brokers have been concerned about the recent speculation that the government may be doing away with down payment assistance programs. This has been a major concern, because many of the professionals depend on this type of financing. It currently comprises up to 15 to 20% of their monthly sales volume.

One of the more popular programs currently being used is the Nehemiah Program, which is a nonprofit organization that was started over a decade ago by Antioch Progressive Baptist Church. This program has helped thousands upon thousands of Americans realize the dream of homeownership.

This recent legislation is part of a larger House Bill, which is currently being enacted by current president, George Bush. The Nehemiah program is based out of Sacramento, California and to date, has helped over 300,000 lower income families to buy homes in the past decade alone. The program accomplishes this task by legally allowing the seller to "gift" the down payment money to the buyer of the home. The funds are then transferred into an account that is handled by Nehemiah Corp. when the loan goes to closing, the amount of money that is required to close is shown on the closing statement as a contribution by the seller.

The Senate passed a bill on July 11, which proposes to eliminate the Nehemiah program. If the bill makes it to the House, it is highly likely that the president will sign off on it.

However, if the bill is signed off by the president, potential homeowners may still come out with some pluses such as a proposed Federal tax credit for first-time home buyers who are a attempting to purchase a home on or before July of 2008.

Other important provisions in the Bill will help existing homeowners who have been affected by costly sub prime loans to refinance those loans with affordable Federal Housing Administration Mortgages.

Another significant proposal of this bill will be to make permanent the higher loan limits on mortgages from the FHA, Fannie Mae, and Freddie Mac. This bill also includes $3.9 billion, which will be used as anti-blight cash for communities across the country to buy vacant, foreclosed properties. This will be done in an effort to help maintain the communities, and to prevent property values from falling further than they already have.

If the government decides to do away with the current down payment assistance programs, it is our hope and desire that they will come up with alternative programs, which will allow first-time homebuyers as well as people with limited finances to be able to realize their dream of homeownership.