Down payment program to end soon

Indianapolis, IN — August 28, 2008
By: David Barras, WISHTV Indianapolis

(Watch it at http://www.wishtv.com/Global/story.asp?S=8917841&nav=0Ra7)

Home buyers beware. If you don't have it in your savings, finding the money for a down payment on a first house is about to get trickier.

Arbor Homes in Indianapolis figures about 30% of its customers have gotten what's called down payment assistance when buying a first home. Steve Hatchel is vice president of sales for Arbor Homes.

"Down payment assistance is a not for profit organization way of providing down payment assistance for home buyers who didn't have the funds to come up with their own down payment," said Hatchel.

The down payment assistance program allows the 3% down payment on an FHA loan to be paid by the seller. It is essentially a gift to the buyer. But on September 30, the program is over. And David May, a real estate broker in Indianapolis said it's a program that will be missed.

"I think it's going to change our market a little bit. I think it's going to reduce the number of first time home buyers entering the market," said May.

The reason for the change is that Congress passed a bill designed to stimulate the housing industry. And while they're taking away down payment assistance, they are providing another opportunity for first time home buyers.

"You actually can claim a $7500 credit against your taxes in 08 or 09," said Hatchel.

In the new program, you have to get your own down payment. Once you close on the house, you'll get a $7500 tax credit. The $7500 has to be paid back to the government over 15 years, but its interest free.

While the down payment assistance program doesn't end until September 30, in order to qualify you have to have final loan approval by then. So the process needs to start by about September 15. Some in the industry think it's a program that's been so successful that Congress may restore it down the road.

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For additional information, please contact Shelley Mitchell, smitchell@nehemiahcorp.org, 916-231-1999.

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