FHA Loans and FHA Mortgages

Nehemiah programs are just one form of a down payment assistance program. You can use these in conjunction with FHA loans. There are other down payment assistance programs such as AmeriDream, Genesis, and a few others.

Lately I have been reading a few blogs that state that these down payment assistance programs are like laundering money. Okay….  I’ll talk about this in a few. Other blogs have talked about how bad the Nehemiah program in itself is bad. The reason why is because it’s more expensive than other DPA programs. Okay?  I’ll talk about this soon.

So, what about those that say these DPA’s are like money laundering. Well, HUD says that you, the borrower, can get 100% of your monies gifted to you. These gifts can come from a family member or a non-profit organization. Okay, sounds good. Believe it or not, the DPA companies are non-profit. So, why is it labeled as illegal? Someone’s opinion? One argument that I have heard is that these non-profit companies are making money off of the borrower. A small measly $500?  Then Mr. Borrower, save the money to put down on the house. Me?  I think it’s a great program if used correctly.

Which gets us to the second part, that the Nehemiah program is more expensive than AmeriDream, Genesis, and a few others. Okay?  What, an extra $100 to $200?  I have had much success with Nehemiah and I have learned in life…."don’t fix it if it’s not broken".  Right?  Or do you take that risk for a $200 savings. Sure, some of you have had some success with the other programs. I just won’t risk it.

As it stands, the Down Payment Assistance programs have helped over 600,000 families since 1997. I will agree that some institutions have abused this type of program. Meaning that the appraisal of the property was sometimes in question, when the lender would try and push the value of the home, so it would include everything that the borrower would need for both down payment and closing costs. And then there are some that argue the reason why these DPA’s are being shut town because of tax implications.

Overall, I have my various opinions on these types of programs. There could be an argument made that a homebuyer with no sweat equity, has nothing to really lose in the whole transaction. And my bigger concern in regards to this is if properly set up, a homebuyer could realistically come to the closing table with no money out of pocket because of these DPA programs. And there have been many times to where that buyer won’t even have $500 saved up after closing. This leaves the homebuyer in a precarious position because no matter what kind of home that you are buying, new or old, things happen. There will be times when you will need money to fix the house or to buy a new appliance. 

On the flip side, these types of DPA loans have put many worthy buyers into homes that were very deserving. My job is not to pass judgment amongst any buyer. My job is to properly educate the homebuyer in their decisions and to make sure that I give them a respectable mortgage, to ensure that they understand the whole mortgage/home buying process.  

Knowing that this has not been resolved hurts a lot of us in the today’s industry. But we just have to keep moving along as business as usual, until a decision is rendered. For any of your mortgage needs, please make sure that you speak to a mortgage professional who is on top of these chain of events. Someone that not only knows their mortgage products, but who understands today’s market.

FYI -  These down payment assistance programs are not limited to first time homebuyers.  Nor do you need to qualify for them. Just as long as you are approved for a mortgage.

For more information, I wrote a more detailed blog on Nehemiah and how to get into a house with little or no monies.  You can use FHA Nehemiah and these other down payment assistance programs for both FHA mortgages and conventional loans.  Do you truly think that FHA/HUD would want to see these programs disappear?  No…

Creative FHA financing – No money out of pocket from the buyer!!! – Part 1