The Nehemiah down-payment assistance program was a means by which sellers contributed toward the down payments on homes by providing the funds to the Nehemiah Corporation, which then passed on the money to buyers, reports About.com. Sellers typically raised the price of the homes 3 to 6 percent to compensate for the down payments. In 2008, the Bush Administration made such programs illegal, and the Nehemiah down-payment assistance program no longer exists, as of 2015.Continue Reading
The Federal Housing Authority allowed the Nehemiah down-payment assistance program, and other similar programs, during the struggling real estate market of the late 1980s, to enable sellers to indirectly contribute down payment funds, explains SFGate. Under the program, the buyer usually paid the price of the home, the down payment, and an extra fee of several hundred dollars that the seller had actually paid as a donation to the organization running the program, which ostensibly operated as a charity. Down-payment assistance programs circumvented federal regulations that forbade sellers from directly helping with home down payments and buyers from arranging with sellers to raise the home price in exchange for waiving down payments.
The increase in home price resulting from seller participation in the Nehemiah down-payment assistance program often priced the home above its market value, but did not improve its equity, according to SFGate. However, the program enabled many buyers without enough savings for down payments to purchase homes, states About.com. The program functioned without buyer income limitations. Buyers could purchase one- to four-unit homes anywhere in the United States as long as they qualified under FHA or traditional guidelines.Learn more about Credit & Lending