Down Payment Assistance Grant
The earlier article which gave notice that the seller funded downpayment assistance programs could very well be coming to and end is still on track. However here is a new program that has the blessing of HUD (The Department of Housing and Urban Development). Simply stated the program is a 5:1 downpayment grant. What this means is that for every dollar that the buyer puts towards the purchase of their home it will be matched 5 times, up to a maximum of $10,000.00.
|
Borrower Funds Contributed |
Grant Amount |
|
$500 |
$2,500 |
|
$1,000 |
$5,000 |
|
$2,000 |
$10,000 |
The grant is handled in the form of a second lien with no monthly payment and is forgiven after 5 years. If the homeowner sells the home prior to the end of the five year period the grant is to be repaid as a percentage of the time the home was occupied. For example if the property sells in 2-1/2 years and the grant was for $5,000 then the seller would have to pay $2,500 of the grant back.
There are some income qualifications that are required to participate in this first time buyer program and it only pertains to primary residences. At the time of enrollment the household income for all parties living in the home must be considered to determine qualification. The maximum allowable household income, determined by family size for the Metro Atlanta area is as follows:
- 1 person = $39,840
- 2 person = $45,550
- 3 person = $51,250
- 4 person = $56,950
- 5 person = $61,500
- 6 person = $66,050
- 7 person = $70,650
- 8 person = $75,200
Normal FHA guidelines apply to the first mortgage and after it is underwritten the loan must also be approved by Federal Home Loan Bank. Here are some of the highlights about this exclusive first time buyer grant:
- Secured second mortgage up to a maximum of $10,000 that if forgiven after 5 years if the borrower still occupies the property.
- No monthly payments are due on the second mortgage.
- Up to 6% seller contributions towards closing costs are allowed.
- Home Buyer education by a HUD or FNMA Certified Counselor is required.
- No additional fees are required
For an in depth consultation to determine how this program can benefit you, contact Mack.
Down Payment Assistance Done
With the recent signing into law of the Housing and Economic Recovery Act of 2008, as of October 1, 2008 seller contributions (interested third parties) to non-profit down payment assistance programs are finished. Nehemiah Corporation of America, the leading non-profit down payment assistance provider in America, estimates that in the next year alone approximately 300,000 families will be locked out from buying a home due to this provision in the bill. Of course this may change as new legislation is being introduced to revive this type program, but with congress on vacation for 5 weeks (damn I wish I could do that) no one knows if or when the program would be reinstated.
What does this mean to First Time Home Buyers in Greater Atlanta? If you are looking to purchase a home using a down payment assistance program you need to get busy NOW. You must find your home and get closed by September 30, 2008 or you run the risk of not being able to utilize this type program. Also the minimum down payment will be increasing from 3% to 3.5%.
I have heard rumors of another program that will assist first time buyers and as soon as I can confirm it I will post it here. See you soon.
