Nehemiah President and Chief Executive Officer Scott Syphax said Monday that Congress is “all but certain” to pass the July 11th version of the Senate housing bill which includes a ban on down payment assistance programs or DAP’s or DPA’s. While Nehemiah is the largest of the DAP’s, there are several others who will also be affected.
At this point, we do not know what the timing of this will be. Will Congress give borrowers until a certain date to get their applications in progress? Our guess is that they will, but only time will tell. What is certain is that any borrowers who are in need of these programs should get their loans in progress now.
Once these programs have been eliminated, this effectively eliminates 100% financing in the US at this time. The only option would then be a 3% gift combined with an FHA loan of 97%. No funds from the borrower are required when using gift funds on an FHA loan. This gift could come from either a family member, or a community down payment assistance or community second mortgage program. Keep in mind that the community down payment assistance/2nd programs have very strict limits on income. For instance, in Georgia the limits on the Georgia Dream program are in the $50k range for the household, though exact figures depend on the number of household members.
This article provides more details:
http://www.sacbee.com/103/story/1099122.html
Another loan option of which most borrowers (and most lenders for that matter) are unaware is the ability to purchase a home or a condo for an elderly parent - as a primary residence. So, even though the borrower will not be residing in the property, we are able to structure the deal as a Primary Residence purchase through one of our lenders - and not as an Investment Property as most lenders would suggest. This gives the borrower the lowest possible interest rates and best terms on the purchase. AND - it is done without putting the parent on the loan.
Keeping the parent off of the loan is ideal as it takes the credit history of the elderly parent out of the equation *and* often it is in the best interest of those involved to not have assets listed in the elderly parents name, for medicare for example. This option allows the home to be purchased without putting the parent on title or on the mortgage.
This option - along with the FHA “kiddie condo” option below - is indicative of the type of extra effort we take here at Primacy Mortgage. This is the new “creative financing” - it’s your lender being knowledgable of every possible loan program and niche that lenders offer, so that you can benefit. Primacy Mortgage - Our Advice Makes a Difference.
Give us a call if you or someone you know wants to purchase a place for a parent!
This is a great program available through FHA that most borrowers are unaware of. The kiddie condo program is a fantastic way for parents to help their children purchase their first home. It requires a 3% down payment and uses the credit rating of a “blood relative” (parent, grandparent, sibling, etc) co-borrower to qualify for the loan. Both the “kiddie” and the relative take title to the home and are on the loan documents. This means that the loan will appear on the borrowers credit report and help them to establish a strong credit history.
Using the kiddie condo program, the borrower must occupy the property as a primary residence, but extra rooms could be rented out to help offset the cost of the mortgage. It’s a great way for a college student, recent graduate, or anyone who is unable to qualify for a mortgage on their own credit standing to buy a home, townhome, or condo with the help of a family member. Yes, that’s right, it doesn’t have to be a condo and it’s not just for kiddies.
The tax benefit for paying the mortgage interest can be divided between the borrowers and co-borrowers depending on how the expenses are paid.
Primary advantages of the program:
- 3% Down-payment required versus a much higher down-payment on an investment property
- Low FHA owner occupied interest rates versus much higher rates on an investment property
- Borrower is able to establish a credit history
