The FHA has finally eliminated the availability of the Seller Funded Down Payment Assistance programs (DPA). The dates of guideline reductions have been released by many lenders today, which I am posting below.

The Seller Funded DPA is when a non-profit organization creates a fund through builders and their associations in order to assist with borrower down payments. The FHA requires 3% down payment, which the borrower can get through DPA, resulting in them coming into the transaction with almost no money. The Fed did not like this so they raised the required down payment to 3.5% and eliminated the hope of getting DPA.  Stats show that 35% of all purchases funded through the FHA had some sort of DPA. NO MORE!! 

The dates are as follows:

• October 1: DPA is eliminated by FHA
• August 15: loans must be submitted and registered to the lender
• October 1: ^ Must have final approval and locked interest rate

FYI: if any changes or updates have to be made by the lender to the file after October 1, the loan will become ineligible for the program.

 

If you have this type of loan, please make sure you call your lender and get the dates and guidelines for their program.  Each lender will follow the basic guidelines, but might have some of their own with regards to locking in rates and/or pulling out of the program before October 1^st.

 

This elimination will lose more borrowers for 2008-2009 which in turn will keep more housing inventories on the market, force sellers to lower prices, make borrowers go upside down on mortgages and overall have a negative effect on the real estate market.  Is this what they call a bubble or a burn? – Dale Robyn Siegel