Seller Down Payment Assistance Program

In the last few weeks, all of the seller funded down payment assistance programs have ceased operations in order to comply with the IRS Revenue Ruling 2006-27 that ruled that providing seller funded down payment assistance was not a chartable activity. The IRS is now making full efforts to revoke the 501c3 status of these non-profit organizations.

In order to fill the void created by this action for low to moderate income buyers needing help, an alternative is the Grant America Program which works the same way but does not give a gift from a non-profit organization but from a Government Entity.

The Grant America Program is available nationwide and defines a low to moderate-income homebuyer as anyone that qualifies for an FHA loan under HUD guidelines or any who qualifies for a non-FHA loan program that accepts grant/gift funds for use towards a down payment.

The maximum allowable Gift to a homebuyer from a Government entity may not exceed 10% of the final sales price and may only be used toward the homebuyer’s down payment and closing costs.

The program is an excellent way to help first time buyers purchase a new home and for sellers to expand their pool of potential buyers. Most of the major lenders have already adopted standards for allowing for this program. For more information, please contact us at Metro Mortgage Company.

• Grant America Program

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