Written By: Bonnie Wilt-Hild
As we have seen the end of seller funding down payment assistance, I thought today would be a good day to discuss other available grant programs that might be of use to potential borrowers. Based on what I have found, most appear to be geared to first time homebuyers, which seems to be where the greatest need it.
I would like to start by saying that FHA is still allowing acceptable grant programs in conjunction with FHA financing and it appears that there are several which are administered by both state and federal agencies where the first time homebuyers are concerned. These grant programs usually seem to be soft seconds that are forgiven over a period of years and some do have income restrictions.
The first one I would like to discuss is ADDI or the American Dream Down Payment Initiative which is actually administered by HUD. It is designed for first time homebuyers and is a 10,000 which can be used for down payment and closing cost expenses and is recorded as a soft second and ultimately forgiven at a rate of 20% per year. There are income restrictions associated with the program based on the number of family members in the home.
Federal funds for this grant are distributed nationwide and the fund is usually administered by state agencies as well as county and city agencies. Direct links to these agencies can be found on HUD’s website at www.hud.gov, click on the grants link on the left side of the page and you will see the information for ADDI on the right side of the next page. By clicking on this link you should be above to follow the links to determine which agencies in your area are administering the grant as well as income limits etc.
I have also found several grant programs through state and local agencies that are acceptable to HUD. If you log on the websites for your local city department of housing and community development as well as your states department of housing and community development there are links for homebuyer assistance that includes grant and gift information available for homebuyers in these areas.
An example would be Baltimore City, Maryland which has a Trolley Car grant. If potential homebuyers take a Trolley Car ride to view properties located in certain city neighborhoods and contract one of these properties within 90 days of the ride, the City of Baltimore will give these individuals a grant for 3,000 towards closing costs. They also have another grant, called Live where you work, which provides similar grant funds for individuals employed and purchasing properties in Baltimore City.
As you can see there are still several options available to homebuyers in addition to the no longer allowed seller funded grant programs. All that is required is a little research and most originators should be able to come up with quite a few options for potential borrowers.
In addition, these options are also great sales tools where real estate agents as business partners are concerned. Processors and underwriters can also research the programs and access the information on the grant provider’s websites. Most of the programs are really user friendly from and underwriting standpoint as well so take a time out and do a little research to see what your company can now offer as an alternative option to seller funding DPA.
About The Author
Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University (www.FHA-Classes.org) as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at: firstname.lastname@example.org.