When H.R. Bill 3221 went into effect on October 1, 2008, seller-funded down payment assistance programs were banned from use. Since then, most home buyers have completely stopped requesting or inquiring about down payment assistance, even though there are many other types of down payment assistance programs still available, despite H.R. Bill 3221. These types include most programs funded by non-profit organizations, churches, employers, family members, and state and local governments.
In this post, I will speak for the state where I practice real estate, Arizona. If you do not live in Arizona, then hopefully this information will at least give you some ideas of where you should look for down payment assistance programs in your own state. In Arizona, there is a very popular state-sponsored program, named Your Way Home AZ, which is only available to buyers of foreclosed properties. When you go to sell your home, this would not be a program you could suggest to your prospective buyers, but there are others!
Many of the larger cities in Arizona like Phoenix, Mesa, and Tempe offer down payment and closing cost assistance, and forgivable soft second loans for buyers of properties within their city boundaries. Another excellent source of down payment assistance can be a local or national non-profit organization, especially one that was created to help individuals and families become homeowners. In Arizona, there is one named Community Housing Resources of Arizona (CHRA). It has been helping people become homeowners since 1988 by analyzing applicants’ individual circumstances and then advising them on the best program for their needs.
I realize I have provided a lot of information here, without many details. That is simply because there are so many wonderful programs from which to choose. To find and research more information, I recommend starting with your state’s association of REALTORS®. In my case, I point my clients to the Arizona Association of REALTORS® website. There, you’ll find the phone numbers and websites of many of the largest down payment assistance programs available to Arizonans, along with general information about mortgage loans, and the home buying process. Lastly, don’t forget to ask your REALTOR® for information. If you decide to list your home with a REALTOR®, you should ask him/her how to market your home to prospective buyers who may need down payment assistance. He/she may already be planning a marketing strategy that includes information about such programs available in your area.