The Nehemiah Program offers down payment assistance to anyone qualified for an FHA loan. There are no additional income or asset requirements. Under the Nehemiah Program, buyers can get down payment assistance for up to 6% of the final contract sales price. These funds can also be used to offset closing costs. The program is open to first-time and repeat homebuyers and is approved for new construction or resale homes.
Nehemiah Program funds are not available for a "second mortgage" or home equity loans. The program is intended to help buyers with the purchase of a new home. Once you find a home and make an approved offer, contact your loan officer about applying for the Nehemiah Program. Your loan officer will fill out the paperwork on your behalf and once approved, the funds will be sent prior to closing.
The seller must participate in the Nehemiah program, which charges a processing fee that may be paid by the seller, homebuyer, or lender. Sellers who pay fees to participate in down payment assistance programs are not allowed to deduct the fee as a charitable contribution. These fees are considered payment for services rendered.
Elimination of Non-profit Down Payment Assistance
On July 30, 2008, President Bush signed H.R. 3221 - Housing and Economic Recovery Act of 2008.
Section 2113 of the bill prohibits seller-funded DPA (Down Payment Assistance) for loans backed by
the Federal Housing Administration. Prior to this bill, the seller could contribute up to 6% to the buyer to
cover either a down payment or closing costs on an FHA loan. The changes became effective October 1, 2008.
Since this program is no longer available, we recommend that you get pre-approved for a low down payment FHA home loan.
Q: What is the debt-to-income ratio for FHA loans?
A: The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long-term debt. With a conventional loan, this qualifying ratio allows only 28% toward housing and 36% towards housing and other debt.
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