What You Need to Know About FHA Loan Programs

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Ever since the beginning of its activity in 1934, the Federal Housing Administration (FHA) has allowed millions of Americans to become homeowners. The FHA provides mortgage insurance on loans issued by approved lenders (banks, investors, companies etc.) in the U.S. and the U.S. territories. FHA aids with insuring all sorts of housing facilities: single family, multifamily, manufactured homes and even hospitals. A number of different programs can be chosen from the FHA generous offer.

The Officer Next Door Program

As part of the Officer Next Door Program (OND), the borrowers are public police officers that may decide on a HUD-acquired home as a single family solution. What does the FHA offer for officers? The benefits include:

  • A 50% discount of  the appraised home value;
  • A $100 down payment.

Through the Officer Next Door program, houses are offered by HUD (The Department of Housing and Urban Development) in areas where revitalization is needed. The neighborhoods are usually low- or medium-income areas with higher crime rates and lots of vacant properties. Nevertheless, the potential for economic development makes such areas good candidates.

As part of the program, the homes were previously insured through the FHA, and for some reason, they entered foreclosure. For properties purchased through an FHA insurance loan, HUD reduces the down payment to as little as $100. In order to be eligible for the program, officers must meet the following requirements:

  • They must have the property as unique residence for a minimum of three years after the home purchase.
  • The officer must be a sworn law enforcement officer with a full-time job for a city, state, county, or Federal law enforcement agency.
  • The officer must have the power to arrest – not just be limited to a certain facility or building in particular.

In order to purchase a property within the Officer Next Door program, the applicant must be pre-approved and have a letter of commitment.

The Teacher Next Door Program

With the Teacher Next Door program (TND), the Department of Housing and Urban Development (HUD) offers single family homes to public school teachers. The program allows for a 50% discount of the home’s value according to the appraisal, and the borrower needs to make a down payment of no more than $100.

Through the Teacher Next Door Program, the homes offered by HUD are available in areas where revitalization is needed. The neighborhoods are usually low- or medium-income urban areas with higher crime rates and lots of vacant properties. Nevertheless, the potential for economic development makes such areas good candidates.

The properties in the program had insurance through HUD at some point and then entered foreclosure. The minimum $100 down payment is possible only if the house is acquired through an FHA-insured mortgage. Teachers must meet the following requirements in order to qualify for a house under this program:

  • The property must remain the teacher’s unique residence for a 3-year period at the minimum.
  • The teacher should have a full-time job in a public, private, municipal, county, state or Federal educational institution. The teacher must have state certification for the profession or be an administrator for the grades K-12.

In order to purchase a property within the Teacher Next Door program, the applicant must be pre-approved and have a letter of commitment.

The Nehemiah Down Payment Assistance Program

The Nehemiah Down Payment Assistance Program is not a government program but a private non-profit housing corporation located in California. Under this program, the qualified home buyer gets a “gift” in the form of an up to 3% discount of the final sale price. Moreover, with Nehemiah, no down-payment is required if the buyer gets an FHA loan.

In order to successfully buy a house under the circumstances, the buyer needs the home seller’s cooperation. The 3% money gift is delivered to the buyer by Nehemiah from an existing trust fund. Once the deal is closed, the seller also makes a contribution to Nehemiah. If you are interested in using the Nehemiah program for home purchase, you need to go through two basic steps:

  1. Get pre-approval for an FHA loan.
  2. After loan approval, find a house and have the Realtor write up the offer through the Nehemiah program.

HART Down Payment Assistance Program

HART stands for the Housing Action Resource Trust, a 501 (c)(3) non-profit community development and housing corporation in California. Numerous selected communities are serviced by the program nationwide.

A money “gift” is available to the home buyer (individual or family) for down payment assistance. The only condition is that the purchaser should meet the HART requirements:

  • The HART gift could be as high as $15,000 for down payment and closing fees.
  • There is no repayment requirement for the gift.
  • 1% of the sales price should be covered by the homebuyer.
  • The HART program allows for the purchase of up to 4 unit homes.
  • You must complete pre-purchase counseling.

The purchase transactions through HART also depend on the seller’s cooperation.

CHDAP Down Payment Assistance

Funded by a California-based corporation, the CHDAP or California Housing Down Payment Assistance Programs help qualified prospects become home owners. By means of a FHA loan, the homebuyer gets a 3% CHDAP silent second and does not have to put money down for the purchase.

The CHDAP silent second is NOT a money gift: the payment is deferred until the property is sold or the loan refinanced. It is never completely forgiven.

Here are the basic qualifications for a CHDAP loan program:

  • The median income of the neighborhood must not be exceeded by the borrower’s household income.
  • The maximum sales price is limited on FHA loans.
  • The program is available for California properties alone.
  • The borrower cannot have owned a home in their name within the past three years.
  • Qualification for an FHA loan is required.

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