Homebuyers have lots of options

Q: I hear some of the most popular programs that help people put a down payment on their home are about to go away. Can you tell me more about that and let me know if anything is being done about this? -- Susan S., Las Vegas

A: It's true that at least one popular program that has helped countless homeowners come up with a down payment is about to be discontinued by the federal government.

As of Oct. 1, the Nehemiah program is no more. This program offers down payment assistance to anyone who qualifies for a Federal Housing Administration loan.

There are no additional income or asset requirements. Under the Nehemiah program, buyers can get down payment assistance for up to 6 percent of the final contract sales price. The Nehemiah program is being discontinued as part of the Housing and Economic Recovery Act of 2008 that was signed into law by President Bush on July 30.

While many home builders and buyers are lamenting the loss of this program, many provisions of this law should help homeowners buy and keep their homes.

For instance, the law offers home buyers who purchase a home between April 9, 2008, and June 30, 2009 a $7,500 tax credit that can be paid back over 15 years. In effect, this is an interest-free loan.

The law still allows other types of down payment assistance, such as funds provided by family members, federal, state and local government programs, and nonprofits that utilize funding that doesn't come from a party to the transaction (like the seller or a home builder).

However, it does not allow down payment assistance programs like Nehemiah that are funded by sellers.

One of the main reasons for this, according to federal officials, is that these seller-assisted loans have had a very high default rate.

"We had a 33 percent default rate. There had to be some changes made," said Ken LoBene, who directs the Las Vegas office of the U.S. Department of Housing and Urban Development.

"This isn't the catastrophic event that some people are claiming. There are still down payment assistance programs available.

If someone really wants a home, and they can really qualify to buy a home, then there all kinds of options out there."

I want to share some good news about the many other options that are still available to help people put a down payment on their home.

LoBene explained that the FHA, which is part of HUD, is helping matters by increasing its loan limits, which will now better reflect current home prices in Las Vegas and around the nation. It's also worth noting, as I've said in past columns, that prospective buyers can still get an FHA loan with as little as 3.5 percent down.

For more information about programs available through HUD, visit hud.gov.

Patty Kelley is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. To ask Kelley a question, e-mail her at ask@glvar.org. For more information, visit lasvegasrealtor.com.