Nehemiah Program
Since President Bush signed the Housing and Economic Recovery Act of 2008 on July 30, 2008, many federally established down payment assistance programs have been cancelled. The Act prohibits seller-funded Down Payment Assistance for loans backed by the Federal Housing Administration. The details of this program are presented for reference only.
About the Program
The Nehemiah Program offered down payment assistance to anyone qualified for an FHA loan. There were no additional income or asset requirements. Under the Nehemiah Program, buyers could get down payment assistance for up to 6% of the final contract sales price. These funds could also be used to offset closing costs. The program was open to first-time and repeat homebuyers and was approved for new construction or resale homes.
Nehemiah Program funds were not available for a "second mortgage" or home equity loans. The program was intended to help buyers with the purchase of a new home. Once you found a home and made an approved offer, buyers were instructed to contact a loan officer about applying for the Nehemiah Program. The loan officer would tghen fill out the paperwork on the buyer's behalf. Once approved, the funds would be sent prior to closing.
The seller was required to participate in the Nehemiah program, which charged a processing fee that could be paid by the seller, homebuyer, or lender. Sellers who paid fees to participate in down payment assistance programs were not allowed to deduct the fee as a charitable contribution. Those fees were considered payment for services rendered.
Down payment assistance and first-time homebuyer programs have expanded and are offered today by state, city, and municipal governments throughout the country. A curated list of down payment assistance programs is available courtesy of FHA.com.
Ask your loan officer for recommendations on down payment assistance programs, or how to make an offer contingent on the use these program.
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