FHA Purchase myth #4 - Down Payment Assistance is gone.
There is much confusion about the recent demise of FHA seller funded Downpayment assistance. Many Homebuyers and Realtors alike are confused by the press coverage.
You can still receive credit for closing costs, recurring & non-recurring, from sellers with FHA Loans.
In fact, the seller can pay up to 6% of the purchase price towards your buyers closing costs, prepaid items, repairs, etc and FHA is OK with this.
So how does this differ from Seller Funded Down Payment Assistance (DPA) (the ones that are not allowed)?
FHA Loans require a minimum cash investment from the buyer of 3.5% of the purchase price from their own funds or from gift funds from Relatives. There are some other more obscure gift fund sources available as well, but they are much harder to find for buyers. The remaining cash necessary to close (IE closing costs, taxes, insurance, points, prepaid Interest, etc) can be paid by the seller.
DPA's utilized a charity or other organization to "donate" the Cash proceeds necessary to homebuyers, therefore helping the buyer meet the "FHA minimum cash investment" requirement. The Seller was actually the one who paid for the funds, via donations to the charity to directly benefit the buyer. With DPA's the buyer didn't have to put any of their own money (savings or gifted) into the purchase. That is the practice that is now outlawed.
So here is what is Available today: The Seller can contribute up to 6% of the selling price in a FHA purchase loan transaction toward the buyers Closing Costs (as defined above). The buyer simply needs to bring 3.5% of the purchase price to the transaction from either their own savings or gifts from family.
Call us to get started buying your home with a safe, secure, affordable FHA Loan. 760-752-4480 or apply online at www.vandykfunding.com. Call the Government Loan experts to find out how to structure your next purchase so that it gets closed.
VanDyk Mortgage is a VA Direct Lender (since 1987) offering VA Loans such as VA purchase loans, VA Streamline Refinance, VA IRRRL, VA Refinance Loans, VA Mortgages of all types. As a Government Direct Lender, VanDyk Mortgage is also a HUD Full Eagle FHA Direct Endorsement Underwriter, ie FHA Direct Lender offering FHA Loans such as FHA Purchase loans, FHA Refinance, FHA Streamline Refinance, FHA 203K Streamline Rehab loans, FHA Jumbo, FHA Jumbo Purchase, FHA Jumbo Refinance, FHA Jumbo Streamline Refinance, FHA mortgages of all types. We offer FHA & VA loans in California, Georgia, Texas, Washington, & More. Visit us at www.vandykfunding.com to get started or just find out more.
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