End in Sight for Seller-Funded Down Payments

Prospective homeowners have until October 1, 2008, to use down payment assistance from a seller to purchase if they intend to finance the house with FHA backed mortgage.

The Housing and Economic Recovery Act of 2008 signed into law in July bars such seller-funded aid on Federal Housing Administration-backed mortgages. Lawmakers added the provision to the housing relief package because about 40 percent of FHA borrowers who went into foreclosure in the past year received down payment assistance from a seller.

The loss of programs such as Nehemiah and Hart which have been helping buyers use seller assistance with their down payment has the potential to keep some buyers out of the market at a time when sellers still outnumber buyers and how it impacts the Sacramento real estate market is yet to be seen.