[SDEngineer]

SDR:

No, because the funds are given back to the gift organization by the seller after the close. It’s legal because the program is operated by a 501(c)3 non-profit charitable organization, which is eligible to provide “gift” funds for the down payment under FHA guidelines (just like a family member could). The funding for the program is then provided after the close by the seller, so the program is reimbursed. They can’t get the funds from the seller before closing, or it would be considered a direct seller contribution to the down payment, expressly forbidden under FHA guidelines.

It’s definitely an unintended loophole, but one the FHA hasn’t been able to get legislated closed (and given current economic conditions, since it’s one of the few ways to get a 0 down, I don’t see politicians having the stomach to expressly close it in the near future). The FHA has, however, managed to exclude a LOT of these gift programs for violation of IRS rules regarding 501(c)3 charitable organizations (excessive fees, salaries, etc). The Nehemiah program, however, is still operational.

[SDEngineer]

It’s actually Nehemiah Program 🙂 (though the Biblical name it’s taken from is usually spelled differently). http://www.nehemiahcorp.org/

The FHA has been trying to get the loophole this program operates through closed legislatively, and has shut down many other gift programs over the past two years, however, at least as of a few weeks ago this particular one was still open – an agent for a community I went to look at offered me the program as part of her closing tools (I didn’t bite – I’m still waiting for significantly larger price drops, and can afford a decent down payment anyway). There is no income limitation on this program – basically if you qualify for an FHA, you qualify for the program.

The 1.5 extra origination fee (the up-front MIP) is a pretty significant extra closing cost for FHA loans though. Again, since the FHA allows up to 6% seller contribution (3% of which would have gone to the gift program) you can still work this out. Of course, 6% is 6%, and with a traditional mortgage, you could just get them to reduce the house price by that % instead. You do wind up paying more using a FHA loan, just not more out of pocket.

[SDEngineer]

It’s actually Nehemiah Program 🙂 (though the Biblical name it’s taken from is usually spelled differently). http://www.nehemiahcorp.org/

The FHA has been trying to get the loophole this program operates through closed legislatively, and has shut down many other gift programs over the past two years, however, at least as of a few weeks ago this particular one was still open – an agent for a community I went to look at offered me the program as part of her closing tools (I didn’t bite – I’m still waiting for significantly larger price drops, and can afford a decent down payment anyway). There is no income limitation on this program – basically if you qualify for an FHA, you qualify for the program.

The 1.5 extra origination fee (the up-front MIP) is a pretty significant extra closing cost for FHA loans though. Again, since the FHA allows up to 6% seller contribution (3% of which would have gone to the gift program) you can still work this out. Of course, 6% is 6%, and with a traditional mortgage, you could just get them to reduce the house price by that % instead. You do wind up paying more using a FHA loan, just not more out of pocket.

[SDEngineer]

It’s actually Nehemiah Program 🙂 (though the Biblical name it’s taken from is usually spelled differently). http://www.nehemiahcorp.org/

The FHA has been trying to get the loophole this program operates through closed legislatively, and has shut down many other gift programs over the past two years, however, at least as of a few weeks ago this particular one was still open – an agent for a community I went to look at offered me the program as part of her closing tools (I didn’t bite – I’m still waiting for significantly larger price drops, and can afford a decent down payment anyway). There is no income limitation on this program – basically if you qualify for an FHA, you qualify for the program.

The 1.5 extra origination fee (the up-front MIP) is a pretty significant extra closing cost for FHA loans though. Again, since the FHA allows up to 6% seller contribution (3% of which would have gone to the gift program) you can still work this out. Of course, 6% is 6%, and with a traditional mortgage, you could just get them to reduce the house price by that % instead. You do wind up paying more using a FHA loan, just not more out of pocket.

[SDEngineer]

It’s actually Nehemiah Program 🙂 (though the Biblical name it’s taken from is usually spelled differently). http://www.nehemiahcorp.org/

The FHA has been trying to get the loophole this program operates through closed legislatively, and has shut down many other gift programs over the past two years, however, at least as of a few weeks ago this particular one was still open – an agent for a community I went to look at offered me the program as part of her closing tools (I didn’t bite – I’m still waiting for significantly larger price drops, and can afford a decent down payment anyway). There is no income limitation on this program – basically if you qualify for an FHA, you qualify for the program.

The 1.5 extra origination fee (the up-front MIP) is a pretty significant extra closing cost for FHA loans though. Again, since the FHA allows up to 6% seller contribution (3% of which would have gone to the gift program) you can still work this out. Of course, 6% is 6%, and with a traditional mortgage, you could just get them to reduce the house price by that % instead. You do wind up paying more using a FHA loan, just not more out of pocket.

[SDEngineer]

It’s actually Nehemiah Program 🙂 (though the Biblical name it’s taken from is usually spelled differently). http://www.nehemiahcorp.org/

The FHA has been trying to get the loophole this program operates through closed legislatively, and has shut down many other gift programs over the past two years, however, at least as of a few weeks ago this particular one was still open – an agent for a community I went to look at offered me the program as part of her closing tools (I didn’t bite – I’m still waiting for significantly larger price drops, and can afford a decent down payment anyway). There is no income limitation on this program – basically if you qualify for an FHA, you qualify for the program.

The 1.5 extra origination fee (the up-front MIP) is a pretty significant extra closing cost for FHA loans though. Again, since the FHA allows up to 6% seller contribution (3% of which would have gone to the gift program) you can still work this out. Of course, 6% is 6%, and with a traditional mortgage, you could just get them to reduce the house price by that % instead. You do wind up paying more using a FHA loan, just not more out of pocket.

[SDEngineer]

Don’t know anything about the CalFHA program, but if it’s just the issue of the down payment, you can still use FHA, just have to be a little more creative about it (and pressure the sellers).

FHA still allows “gift” programs to provide the purchasers 3% down payment, essentially allowing the seller to pay that mandatory 3% down. Google “Nehemiah” for one of the main programs that do this. Essentially how it works is the program gives you the 3% to put down towards the property to satisfy the FHA’s requirement, then after closing, the seller gives that 3% amount to Nehemiah. Kind of snarky, but still completely legal (for how much longer is unknown, as there have been some attempts to close this loophole).

Given the market today, it should be fairly easy to talk any seller into this 3% concession, and as a bonus, you’d start your homeownership with at least a little equity cushion.

[SDEngineer]

Don’t know anything about the CalFHA program, but if it’s just the issue of the down payment, you can still use FHA, just have to be a little more creative about it (and pressure the sellers).

FHA still allows “gift” programs to provide the purchasers 3% down payment, essentially allowing the seller to pay that mandatory 3% down. Google “Nehemiah” for one of the main programs that do this. Essentially how it works is the program gives you the 3% to put down towards the property to satisfy the FHA’s requirement, then after closing, the seller gives that 3% amount to Nehemiah. Kind of snarky, but still completely legal (for how much longer is unknown, as there have been some attempts to close this loophole).

Given the market today, it should be fairly easy to talk any seller into this 3% concession, and as a bonus, you’d start your homeownership with at least a little equity cushion.

[SDEngineer]

Don’t know anything about the CalFHA program, but if it’s just the issue of the down payment, you can still use FHA, just have to be a little more creative about it (and pressure the sellers).

FHA still allows “gift” programs to provide the purchasers 3% down payment, essentially allowing the seller to pay that mandatory 3% down. Google “Nehemiah” for one of the main programs that do this. Essentially how it works is the program gives you the 3% to put down towards the property to satisfy the FHA’s requirement, then after closing, the seller gives that 3% amount to Nehemiah. Kind of snarky, but still completely legal (for how much longer is unknown, as there have been some attempts to close this loophole).

Given the market today, it should be fairly easy to talk any seller into this 3% concession, and as a bonus, you’d start your homeownership with at least a little equity cushion.

[SDEngineer]

Don’t know anything about the CalFHA program, but if it’s just the issue of the down payment, you can still use FHA, just have to be a little more creative about it (and pressure the sellers).

FHA still allows “gift” programs to provide the purchasers 3% down payment, essentially allowing the seller to pay that mandatory 3% down. Google “Nehemiah” for one of the main programs that do this. Essentially how it works is the program gives you the 3% to put down towards the property to satisfy the FHA’s requirement, then after closing, the seller gives that 3% amount to Nehemiah. Kind of snarky, but still completely legal (for how much longer is unknown, as there have been some attempts to close this loophole).

Given the market today, it should be fairly easy to talk any seller into this 3% concession, and as a bonus, you’d start your homeownership with at least a little equity cushion.

[SDEngineer]

Don’t know anything about the CalFHA program, but if it’s just the issue of the down payment, you can still use FHA, just have to be a little more creative about it (and pressure the sellers).

FHA still allows “gift” programs to provide the purchasers 3% down payment, essentially allowing the seller to pay that mandatory 3% down. Google “Nehemiah” for one of the main programs that do this. Essentially how it works is the program gives you the 3% to put down towards the property to satisfy the FHA’s requirement, then after closing, the seller gives that 3% amount to Nehemiah. Kind of snarky, but still completely legal (for how much longer is unknown, as there have been some attempts to close this loophole).

Given the market today, it should be fairly easy to talk any seller into this 3% concession, and as a bonus, you’d start your homeownership with at least a little equity cushion.

[SDEngineer]

FHA still can be done with 3% down (or 0% if using one of the “gift” programs like Nehemiah) for first time buyers. FHA’s DTI requirements (both front-end and back-end) are strict enough though that most likely anyone who qualifies should be able to fairly easily afford the monthly payment.

Wonder what may happen though to that program if they start seeing walk-aways not due to unaffordability but due to buyers simply leaving a house thats well underwater.

[SDEngineer]

FHA still can be done with 3% down (or 0% if using one of the “gift” programs like Nehemiah) for first time buyers. FHA’s DTI requirements (both front-end and back-end) are strict enough though that most likely anyone who qualifies should be able to fairly easily afford the monthly payment.

Wonder what may happen though to that program if they start seeing walk-aways not due to unaffordability but due to buyers simply leaving a house thats well underwater.

[SDEngineer]

FHA still can be done with 3% down (or 0% if using one of the “gift” programs like Nehemiah) for first time buyers. FHA’s DTI requirements (both front-end and back-end) are strict enough though that most likely anyone who qualifies should be able to fairly easily afford the monthly payment.

Wonder what may happen though to that program if they start seeing walk-aways not due to unaffordability but due to buyers simply leaving a house thats well underwater.

[SDEngineer]

FHA still can be done with 3% down (or 0% if using one of the “gift” programs like Nehemiah) for first time buyers. FHA’s DTI requirements (both front-end and back-end) are strict enough though that most likely anyone who qualifies should be able to fairly easily afford the monthly payment.

Wonder what may happen though to that program if they start seeing walk-aways not due to unaffordability but due to buyers simply leaving a house thats well underwater.

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