- The Washington Times - Friday, October 18, 2002

Down payment assistance programs are one of the most overlooked benefits in the home buyer's tool box. For many, the No. 1 obstacle to buying a house is the down payment not the ability to qualify for the monthly payment.

With the appropriate down payment of 5 to 10 percent, many home buyers could qualify for the purchase of their dream home. Following years of forming creative home financing, governments on all levels and nonprofits realized one of the missing elements was the down payment. Now, more than ever, down payment assistance programs are readily available to home buyers.

Sellers competing for buyers can benefit from these programs, as well. Neighborhood Gold is such a program that requires the seller's participation before granting the down payment funds to the buyer.

NeighborhoodGold.com reports that "the seller gets full asking price for their home and agrees to pay a seller's service fee to Neighborhood Gold. The fee equals the grant amount plus 1 percent of the cost of the home (not to exceed $1,000)."

The program can be used on any lender program that allows a gift from a nonprofit group.

The six-step process in using the program may create problems for buyers in a hot seller's market, however, as the Neighborhood Gold nonprofit must be involved in the settlement process and that slows down the closing process, which might scare some sellers.

If you're well on your way to saving up for a down payment but would like some help in making those dollars grow, then you may consider an Individual Development Account.

"Individual Development Accounts are, in essence, 401(k) plans for low-income families and individuals who probably do not have access to such a savings plan through their employment," according to IDANetwork.org. IDAs are generally available through nonprofit groups, as well as credit unions.

Here's how they work. The individual or family commits to a set amount of monthly savings over a period of time, one to two years, for instance. Once the future home buyers have met their savings goals, the nonprofit matches those savings through the IDA program. Section 8 participants interested in homeownership should consider enrolling in a local IDA program. Not every city has an IDA geared toward homeownership.

For state-by-state IDA information, visit www.IDANetwork.org and click "State Pages."

Another down payment assistance program may be as close as your company's human resources department. More and more employers are implementing Employer-Assisted Housing (EAH) programs to hang onto employees.

Fannie Mae has a great online brochure at its site (www.eFannieMae.com) about how an EAH program works, but the brochure is pretty well hidden from the front page. Click "Single Family" under the "Affordable Housing and Community Development" section, then click "Employer-Assisted Housing" under "Initiatives and Partnerships."

If your employer doesn't have an EAH program, this brochure can help get one established.

Probably the leader of the pack in down payment assistance programs is the Nehemiah Program (www.getdownpayment.com or call toll free 877-NEHEMIAH.) This program provides grants to home buyers from 1 percent to 6 percent of the selling price of the home. Since 1997, the program has funded more than 120,000 grants to families seeking homeownership.

These are just a small example of what's available in the area of down payment assistance programs and not all of the programs out there have income limits. Many of these programs are administered on the local and state level. Visit your favorite search engine and plug in "down payment assistance" and then the state name for regional programs.

M. Anthony Carr has written about real estate for more than 13 years. Reach him by e-mail ([email protected]).

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