Finding the Money for the Down Payment?
Don't have the money for your down payment? You have options!! Here's some sources that might be able to help.
Gifts from Family / Relatives
Hopefully, you have been able to put a little money aside each month or held back money from your income tax refund in order to build a nest egg for the purchase of your next home. FHA allows for gifts from relatives to be used towards your down payment. It is assumed that when a family member gives a gift of downpayment funds, they are aware of the financial circumstances of the buyer and are also willing and able to help out if need be.
There is even a provision for family members LENDING the buyer the downpayment, as long as the repayment terms are formally stated in writing and the payment terms are included in the buyers debt ratio for qualifying purposes. (You could pay back the loan from the tax refund.)
Here’s how it works:
FHA allows the required downpayment (generally 3.5% of purchase price) to be a gift from someone who would logically be concerned about housing for the borrower. This means parents, siblings, other close family members. It can also mean employers in some circumstances, or even very close friends or roommates if the relationship can be verified.
The relationship needs to be verified.
That sounds like an invasion of privacy? It is often viewed that way, but the spirit of the HUD regulation is that unallowable donors be prevented at all costs from participating in the gift.
Documenting the Gift Transaction.
The Lender is going to require (based on HUD / FHA regulations) that every step of the transaction be verified as happening exactly as represented.
The loan file must have:
A gift letter written and signed. It must say exactly what FHA rules call for, so wait until the Lender provides you with the right form.
Proof that the donor has the money to give and that it truly belongs to them. This can be a verification from their bank or a copy of a bank statement showing the funds in the account longer than just recently. (This is where you begin to prove that the Realtor, Builder, or Seller did NOT give the money to Mom and Dad to give to you).
Document the funds as they move from your donor’s accountin to your account or to the Title Company to hold in escrow. This is no time to play games. The check should be from the same account as above. If it is a certified or cashiers check, it will have the name of the Remitter on it.
The actual transfer of the money is the most critical element of proof. Title Companies and Escrow Agents are required by Federal Law to verify that nothing sneaky happens at the closing table to undo any of the above items. The Realtor, Builder, or Seller can NOT pay Mom and Dad back at closing. Neither can you. No side deals. It is up to you to make sure you don’t commit Mortgage Fraud.
Are your relatives and family members tapped out?
Ask your lender if you qualify for one of these Down Payment Assistance Programs. (Don't have a lender, yet? NO PROBLEM! Click the more info link below and use one of ours. They will be able to advise you on your best options and what to do next.)
Head Start to HOME Ownership Program
The Head Start to HOME Ownership (H2H) Program provides financial aid in the form of down payment and closing cost assistance to eligible families/individuals interested in buying a home. Families/individuals who do not currently own a house, who will reside in the home as their primary residence and who meet household income criteria will be eligible for assistance pending funding availability.
Florida Homebuyer Opportunity Program
During the 2009 regular legislative session, the Florida Homebuyer Opportunity Program was created. This program, which will be distributed through and operated under the SHIP program requires that the funding be used to provide up to $8,000 in purchase assistance to applicants that are eligible to receive the federal first-time homebuyer tax credit created through The American Recovery and Reinvestment Act of 2009. The assistance shall be expected to be repaid by the Applicant when they receive their federal tax refund
This means that you can use the FHOP funding as the required 3.5% down payment requirement for FHA approved lender .Interested persons should contact their local SHIP office for additional information and/or to apply for the program.
The Florida Housing Services Division allocates SHIP funds to the Housing Partnership of Jacksonville to administer the Home Buyer's Club down payment assistance program. The purpose of the program is to provide qualified borrowers with a source of down payment and closing costs assistance.
The maximum income limit for a family is 120 percent of the median gross annual income for Duval county, as published by the Federal government, and is subject to change annually. Applicants must be established as credit worthy and contribute $500 to the mortgage transaction.
Eligible properties are single family, owner-occupied residences located in Duval county. The maximum assistance amount is $14,999. The maximum sale price of a house is $247,500.
Assistance is provided as a 0 percent interest rate loan for 15 years and shall become due if the homebuyer sells, transfers or disposes of the property by any means.
For more information onprograms for prospective home buyers through the Housing Partnership, call (904) 398-4424.
SHIP Down Payment Assistance Program - CLAY
Want to know more?
Click here, then submit this brief form as soon as possible. Be sure to put in the comments that you are interested in learning more about the down payment assistance programs.
