In the previous post we talked about how the 100% financing programs have gone bye bye, however, there is an alternative that can help you still obtain 100% financing and that is the Down Payment Assistance Programs.

Q. Can I still buy a house with 0% down payment and 0% Closing Cost.

A. The answer is definitely YES! There are still many Down Payment Assistance Programs (DPAP) out there that you can take advantage of. In-fact FHA products are getting more popular now and as of March 13 2008 the loan amounts limits is $346,250 for one family and $443,250 for two families.

Q. How the Down Payment Assistance Program Works?

A. The basic way it works is that the buyer and seller agree to use an assistance program. Then, the program contributes funds as a no-strings-attached gift to the buyer to offset the down payment. After the sale is consummated, the seller donates that amount, plus a service fee, to the assistance program company. The company providing the money earns cash on the fee it collects, and uses the proceeds to continue its mission.

Q. How do I find Down Payment Assistance Companies?

A.The major ones are Nehemiah and AmeriDream but there are others. Make sure you speak to knowledgeable loan officer before signing anything.

Q. Is it true that HUD, REO and Bank Owned Foreclosures do not work with Down Payment Assistance Companies?

A. NO! Depending on the real estate market and home inventory levels many banks may choose whether to work with them or not. According to a recent article in the New York Times, officials at HUD are skeptical of the program, and have stopped supporting the practice. They claim that this technique encourages borrowers to buy houses-and incur mortgage debts-that they can’t really afford. Meanwhile, Nehemiah and another down payment assistance company, AmeriDream, have sued in federal court in an effort to have the HUD moratorium overturned. Also it is very important how the offer will be written and presented. There are strategies that can be used to get your offer accepted.

If you have further questions on how these programs work, please feel free to contact me at nesa@theloftstop.com - Nesa Kleinheksel