How To Sell Your House "no Money Down"
Recently I read a post by Jeffrey Adam on this site that caught my interest. He was gracious enough to call me (twice) and explain it to me over the phone and give me the web information required for me to learn a little more.
Through Nehemiah, Hart, and several other FHA approved agencies a seller can get a grant of up to 6% of purchase price for their prospective buyers. That way the buyers are concerned only with the payments and not a large chunk of cash up front.
How it works is you the seller give up to 6% to Nehemiah (or the others) and a fee of $495 and they make a grant to the buyer for the amount. You generally would raise the price accordingly (i.e. your house is listed at 100K and you raise the price to 105K) and it all comes out at closing.
The benefits are that you are allowing a buyer to buy your house with little out of pocket expense and your house sells faster than the others that require 3-5% down and 3.5% in closing costs. Additionally you can often write off the amount sent to Nehemiah as a cost of sale on your taxes 
For a technique requiring no out of pocket I think it is a great idea!
Thanks Jeff for telling me about it
Randall
The Nehemiah program is a Private California Non-Profit Organization that offers down payment assistance programs to qualified homebuyers. This programs offers free gift funds to be used towards the down payment and closing costs for eligible FHA loan programs. Under this program, these funds do not have to be paid back. Nehemiah will gift up to 3% of the final sales price on a home
See http://www.fhaloan.com/nonprofit_nehemiah.cfm
The Housing Action Resource Trust (HART) program is a California 501 c (3) Non-Profit Housing and Community Development Corporation that promotes homeownership by offering down payment assistance programs to qualified low and moderate income homebuyers. This programs offers free gift funds to be used towards the down payment and closing costs for eligible FHA loan programs. Under this program, these funds do not have to be paid back. HART will gift up to $15,000 of the final sales price on a home
See http://www.fhaloan.com/nonprofit_hart.cfm
For other programs see http://www.fhaloan.com/extra_programs.cfm
What I saw on Nehemiah on their website showed a gift of up to 6% as the upper limit. Jeff has confirmed this as well. There are several other like organizations that are also FHA certified.
Hey Stockpro99. I'm in Beaverton and just wanted to say your post is interesting. I'm assuming this is for conventional financing only: no owner financed, CFD, etc. Thanks. Dennis
yes, this if for conventional financing.
That method is effective, however it can create a problem with some title companies and lenders, if you chose to use this method the buyer needs to be sure the grant agencies can deposit the funds into the buyers account prior to closing.. This will show the "Funds to close" as available.
I am a Mortgage Broker in Florida and have 100% Financing options with or without mortgage insurance and in most cases the seller can pay up to six percent of the purchase price towards closing cost. This would work the same way as you described... $100,000 marked up to $105,000. Now you have a buyer buying your home with ZERO cost out of pocket, and you are more likely to get full asking price+ for your property because you are helping them achieve their goal!
If you would like more information on this or any other products please send me a private message or you can e-mail me @ **Please See My Profile**
The non-profit programs are good for the people that don't have money for there down payment or closing costs, and there is enough equity above the sales price to raise the price to include the 6% down and or closing costs. There is always a down side though, there is Mortgage insurance on all of these type of loans and if you compare these type of loans to other 100% programs you will find that the payments are more favorable with out MIP. FHA will be alittle more favorable if your credit score will not let you participate in the 100% programs!
Good Luck,
Robert
I am in florida also and would like to talk with you about financing my buyers. e-mail me sfh at soldinaweek . com
In Oregon and Utah where I have done most of my deals the seller is limited to "3%" contribution towards the buyers costs/down.
This is why I like Nehemiah.
[addsig]
is the nehemiah program only valid in california , if so does any body know any similar programs that can be applied in New York
I have done several loans using the Nehemiah gift program. I too am a Licensed Mortgage Broker in Florida. This program only works with FHA, not conventional loans (Fannie Mae or Freddie Mac). The benefits include no money down purchase for people who can't qualify for conventional financing (FHA is much more forgiving in its credit requirements, i.e. no minimum or credit score required, some collections ok, etc.). The program is approved by HUD the Government Agency which empowers FHA. So if you can do FHA loans in your state (their is no state you can't do them) then you can use Nehemiah. It is not state specific. FHA allows up to 6% seller contribution. Again it is not state specific.
It's a great progam and others like it as well. However, it's not for everyone. The borrower has to be ok with the slightly higher rate which a FHA loan commands, the high cost of mortgage insurance (usually they can't qualify otherwise so they may not have a choice), and, as mentioned above, the home has to appraise with the Nehemiah gift amount added to the sales price.
Most conventional loan programs have stiffer credit/qualifying requirements than does a FHA loan. But they are easier to do.
nehemiah is nationwide
These grant programs are great but they are only applicable to Fha loans? Besides having to go through the process of spending money out of pocket to give to them, these grants are a legal way to assist a buyer. The same result can be achieved by raising the sales price and having the seller contribute up to 6%nrcc from the proceeds of the sale, at the time of closing.
I am curious how the appraisal comes into play when using one of these programs.
Does anyone know what the maximum closing help allowed in Va or Md?
Does the Nehemiah program have seasoning issues?
I recently used Nehemiah to sell a house. We closed 11/19. There are 4 parties in this transaction:
1. Buyer
2. Seller
3. Mortgage broker doing loan for buyer
4. Settlement agent
1. Buyer can be anyone, no qualifications
2. Seller must agree to give Nehemiah 1-6% + $499 of which the origional amount goes to buyer at closing
3. Mortgage broker is responsible for requesting the money
4. Money it sent by Nehemiah to the settlement agent before closing
Nehemiah doesn't care about seasoning, what type of loan there is or anything. It is all dependent on the lender.
In my recent transaction we used a lender that didn't care about seasoning the down payment money or even where it came from. Nehemiah provided the money no holdups.
Regardless the property must appraise for enough to allow these gift funds to make sense. My recent transaction I wanted to sell for $210k but the house appraised for only $202k. I still used Nehemiah but I profited less that what I wanted to.
I'm not sure what you all are talking about in regards to maximum contributions in different states. My thought is that this would be an lender thing. Maybe this program only allows 3% to be gifted vs 6%. Or maybe you just use a lender that doesn't care about where the money is coming from.
All in all Nehemiah worked great for me.
As an on-site agent I have done many deals using down-payment assistant programs in new home communities. My question would be what is the minimum score needed to do it for a resell. I wonder if the qualifications change. I try to have enough spread that I can carry back a second for 5% and still make a decent profit. My mtg broker can get just about any approved on a 95% with a 550 scoe or higher. I wonder if the nehemiah program would work as well.
Sunztu18