Downpayment Assistance
HUD has long recognized the important role that Downpayment Assistance through secondary financing plays in providing affordable housing opportunities. There are three categories of DAP assistance providers:
1) Nonprofit and Nonprofit Instrumentality of Government DAPs: Nonprofits and Nonprofit Instrumentalities of Government that provide DAPs in the form of a lien in conjunction with an FHA first mortgage lien, must be approved by HUD. HUD maintains a Roster of those Nonprofits and Nonprofit Instrumentalities of Government that have been approved.
2) Government Entity DAPs: No approval is required for Government Entities that provide secondary financing in the form of a lien in conjunction with an FHA first mortgage lien. HUD does not maintain a list of Government Entity DAP providers. Mortgage lenders are responsible for assuring that a Government Entity DAP meets all appropriate FHA requirements.
3) Gift Programs: FHA does not “approve” down payment assistance programs in the form of gifts administered by charitable organizations (i.e., nonprofits). Mortgage lenders are responsible for assuring that the gift to the homebuyer from the charitable organization meets the appropriate FHA requirements and the transfer of funds is properly documented.
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