DPA from family, or true gifts/grants with no seller participation, government grants and the like are still permitted. (At least we believe so, until rules are promulgated.)
HR6694 is the attempt to re-authorize charitable organizations to participate in DPAs via the seller. This bill does not have a good chance of passage, though. Al Green from TX is a co-sponsor.
The difference in DPA is that until now conventional lenders usually had a 3% maximum on seller concessions, while FHA allowed up to 6%. Of course, every lender has his own rules, but Federal law will make all of these illegal except true grants and assistance from family.
There is legislation just introduced into Congress to allow the seller-funded DPAs to continue. It carries a couple of powerful Senate sponsors... but HUD and FHA administrators are strongly opposed to salvaging seller-funded DPAs. I don't recall the bill number to track it.
However, down payment assistance programs from true non-profits (eg Catholic Charities USA) , state and local government, and family gifts are all acceptable alternatives to buyer savings for the statutory down payment on FHA insured mortgage loans.
As a rule of thumb, no.
Ameridream, Nehemiah, H.A.R.T. and similar entities lost their non-profit status in 2005 after an IRS examination of their business operations. So they don't count as non-profit grants such as a one received from a religious or civi group.
The reason is the source of the grant: the seller. Under Fannie Mae and Freddie Mac guidelines, a seller-funded "grant" is an inducement to the sale and cannot be counted towards the buyer's down payment requirement.
HUD was forced to accept these grants after losing a series on court arguments in 2000. At the time, Ameridream and it's competitors had non-profit status, and they took advantage of a loophole in HUD guidelines for FHA insured loans that vaguely defined "non-profit grants" as coming from entities formed under IRS rules for non-profit companies.
In 2005 the IRS revoked their non-profit status, and HUD was quick to issue a Mortgagee Letter (this is the document HUD uses to update FHA guidelines) barring Ameridream etc from participating in FHA insured transactions. The seller-funded down payment assistance companies successfully sued, and it literally took an Act of Congress (signed into law July 30 2008) to finally clean up the mess and ban seller-funded down payment companies from FHA insured transactions permanently.
There is a "Hail Mary" bill introduced into COngress to restore seller-funded down payment assistance grants to FHA insured transactions, but it faces stiff oppostion from HUD due to the outrageously high default rate on FHA-insured loans using seller-funded down payment assistance programs - the default rate is DOUBLE the default rate of loans using borrower savings, family gift, or a community grant.
Aren't the down payment assistance programs going away beginning October 1st 2008? Are there any provisions to begin retroactive at this time OR are we going to lose those programs?
Also keep in mind that many Downpayment Assistance Programs and Seller Financing programs will be going away in October unless Congress changes their mind again.
Ask your realtor to recommend a lender to help you identify which program will be best for you.