NEHEMIAH LOAN PROGRAM CUT
HOME LOANS, INDUSTRY NEWS, REAL ESTATE LEGISLATION
July 30th, 2008
President Bush signed into law today HR 3221. One of the provisions of this law will do away with a popular loan program that is used in conjunction with FHA financing. The Nehemiah program allowed property sellers to donate the buyer’s downpayment (approximately 3% of the purchase price) to a non-profit. In turn the non-profit would gift the downpayment to the buyer essentially allowing the buyer to buy the home with no downpayment. This loophole has allowed many buyers to purchase a home even if they lacked sufficient funds to cover the downpayment.
Starting October 1st, 2008, this loophole will be closed. Buyers will be required to make a downpayment from their own funds or it can be gifted from a family member. Sellers are allowed to contribute up to 6% of the purchase price to help the buyer pay all or part of their closing costs but not the downpayment. This seller credit could also be used to buydown the interest rate which would lower the payment and interest rate for the life of the loan. Closing costs typically average 4.5% of the purchase price.
For questions or additional information contact author Brad Garbutt as follows:
530-224-6767
530-941-7492
REAL ESTATE PROFESSIONALS GMAC
BRAD GARBUTT
REALTOR/BROKER
TWENTY FIVE YEARS LOCAL REAL ESTATE EXPERIENCE
