Friday, November 7, 2008

Here's How to Get the Down Payment for an FHA Loan

Now that seller-paid down payment assistance (Nehemiah, AmeriDream, etc.) is gone for FHA loans, it's good to know what the alternatives are if you do not have the mandatory 3% FHA down payment (it goes up to 3.5% on January 1).

If you have household income that falls below the income guidelines established by the Colorado Housing Assistance Corp. (CHAC) and all the other non-seller-paid down payment assistance programs, then that is the easiest way to get the money for the down payment. There is an assistance program for every county in Colorado.

If you have household income above the guideline limits, then the best way to get the down payment is to have a relative either give or lend you the money. It's OK for the relative to borrow it themselves before they give or lend it to you.

If the money is a gift, then the relative needs to sign a gift letter stating that the money does not have to be paid back.

If the money is a loan from a relative, then they have the option of making it a secured loan (making it a second mortgage), or making it an unsecured loan (the only lien against the property will be the FHA loan).

There is a bill in Congress to re-establish seller-paid down payment programs, but it is anyone's guess at the moment whether that will pass and be signed into law.

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