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As of October 1, 2008, down payment assistance programs (DPAs) will no longer be allowed under federal law. DPAs allow sellers to channel money through a third-party DPA non-profit organization to pay for all or part of their buyer’s down payment on the property, when the buyer is using a Federal Housing Administration (FHA) loan. Arguments against the DPA program claim that a higher rate of DPA loans end up in foreclosure than other types of loans. They also claim that the DPA program encourages inflated property values and prices so that the sellers can more easily afford to make the buyers’ down payments for them. This is bad news for both buyers and sellers.

FHA loans traditionally allow for smaller down payments than more traditional loans, making FHA loans popular with first-time home buyers. Especially now, when securities and investments are down, the need for down payment assistance programs is bigger than ever, so that more people can achieve their dreams of Chandler home ownership, and make down payments without relying on tanked investments.

DPA Program

Sellers in the Gilbert real estate region would also benefit from the DPA program, as offering down payment assistance drives up buyer interest on a property and can help a property sell faster than it might have otherwise. Many people believe that by doing away with the DPA program for FHA loans, the Federal Housing Administration is doing away with their ability to buy and sell real estate.

There is of course still some help for new home buyers who may need a bit of assistance making a down payment. The government and FHA still allow gift monies from families and employers to be used for down payments on new home purchases.