Vote For The Continuation Of Down Payment Assistance Programs
September 4th, 2008 categories: Buyers, opinion
Part of the new housing bill passed that goes in to effect October 1st is the removal of down payment assistance programs such as Nehemiah and Ameridream.
These programs have been very helpful for buyers who do not have the full 3%, soon to be 3.5%, down payment required by FHA loans. They allow the sellers of the property to contribute to the down payment required by the lender.
On October 1st this will no longer be allowed. Family members can still contribute to the required down payment, just not the sellers of the property. Sellers can however still continue to pay for the closing cost of the purchaser.
The issue with this program is that the loans using this program have traditionally not performed as well as loans from people who have had to place their own hard earned money in to the transaction.
There is no doubt that if the program continues, it will have to be altered. There will be tighter restrictions on those using it. The one case that I have heard is that the DPA (down payment assistance) programs are saying they will require their purchasers to have a credit rating of at least a 680+ score. This will do away with many people who slide under the FHA loose credit rating check and end up with little to no money involved in the transaction.
In this case, I am in favor of the DPA program staying around. I do believe that many of our first time buyers who are very qualified to purchase could use a great program such as this to help stimulate our market. I am like many of you want nothing less than qualified buyers. I am not ready to repeat and re-live the mess we are going through currently.
At the same time, to get out of this mess we have to have first time buyers. They are the market stimulator’s. I simply do not want to make it so difficult for bottom of the housing chain to purchase when they can make the monthly payment and have the income and credit to prove it to miss their opportunity.
If you would like to vote, for DPA (down payment assistance) program extension click here.
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DO you think programs like Nehemiah will prevaile? I read a new article today that HUD is rethinking the elimination od the DPA. They want changes but they are willing to keep DPA alive. What are your thoughts on this? I would love to own a home a keep a few bucks in the bank for a rainy day! Thanks Crystal.
Hey Crystal
It is a tough choice since the whole purpose of requiring a down payment is to force the purchaser to inherit some of the risk of buying. DPA eliminates that. However, I don’t feel to cut off QUALIFIED buyers all together is the perfect solution. I say tighten the restrictions on the DPA program and keep it alive for people like yourself.