FHA Seller-Financed Down Payment Program

Section 203(b) of the National Housing Act was amended to allow more down payment assistance options and protections for home buyers who have their mortgages insured by the Federal Housing Administration.

The amendment specifies that any government or non-profit agency administering the down payment assistance is obliged to make counseling options available to the borrower regarding the responsibilities of homeownership. The amendment also includes a conflict-of-interest clause that prohibits the use of gifts as an incentive to participate in a down payment program.

Finally, the amendment imposes a civil money penalty against the use of gifts to influence the appraisal of the property in a way that makes it more favorable to purchase.