Question:

How are down payment gift assistance programs used?

Answer:

Down payment gift assistance programs help borrowers who do have enough funds for the monthly mortgage payment to get funds to cover down payment and loan closing costs. Those down payment grants come from gift assistance companies and it is your lender to decide whether the grant company you chose is legitimate and complies with requirements set by HUD.

Why are down payment gift assistance programs used?

Down payment grant companies get their funds from sellers who would like to help get their house sold, but the law restricts them in helping buyers to do so. If sellers enroll into a down payment gift assistance program, they put in funds for the buyer to assist them with down payment and closing costs, and pay up to 1% of the house value to the grant company for their services. Upon sale, down payment money is transferred to the lender, and the seller is not involved in any way in the transaction.

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