As of July 30, 2008, the Federal Housing Administration no longer offers down payment assistance on FHA-backed loans, as stated by FHA.com. The Housing and Economic Recovery Act of 2008, signed into law by President George W. Bush, prohibits these types of grants.Continue Reading
Due to the end of these grant programs, potential homebuyers can apply with the FHA for a preapproved home loan that ensures a lower down payment than typical loans. The FHA website offers an online tool for beginning the preapproval process. Potential borrowers can also contact their local mortgage banker and request an FHA-approved agent to guide them through the application process, advises FHA.com.
The Housing and Economic Recovery Act was designed to shift FHA loan programs away from high-risk borrowers by banning down payment assistance and increasing the minimum down payment for FHA-backed loans from 3 percent to 3.5 percent, according to CNN Money.
Prior to the passing of the act, the FHA offered a number of grant programs, offering up to 10 percent of the purchase price of a home, to be applied towards the down payment, explains FHA.com. Typical grant amounts ranged from 3 to 6 percent. To qualify for grants, the borrower typically had to meet minimum and maximum income requirements.Learn more about Credit & Lending