Charleston, SC Posts


New Housing Bill-what does it mean to buyers and sellers?

A new bill was passed by Congress today which will affect Buyers and Seller. 

•1.    DOWNPAYMENT ASSISTANCE BAN: The bill will remove downpayment assistance (DPA) programs for FHA loans effective September 30, 2008.  However, it's not too late!  Now is the time to buy! It's time to get under contract before the deadline.  Sellers, this means, the only way for a non-veteran borroweRS to get 100% financing is going to be gone in less than 60 days. 

•2.    INCREASE FHA DOWNPAYMENT: Additionally, the minimum downpayment has increased from 3% to 3.5%.

•3.    INCREASE LOAN LIMITS: There was a permanent increase in "CONFORMING LOAN" limits also.  The cap use to be $417,000.  Mortgage will now be guaranteed up to $625,500 by Fannie Mae and Freddie Mac. This also applies to FHA loan limit caps making it easier to for borrowers in upper price ranges to get mortgages.

•4.     NEW HOME BUYER CREDIT: The good news about the bill is that first time homebuyers will now be able to receive a $7500 tax credit up to 10% of a homes purchase (but no more than $7500). The refund, however, serves more as an interest-free loan, since it would have to be paid back over 15 years in equal installments.

So what does this mean?

In the Charleston market, one of the biggest obstacles in the current market is financing options for qualified buyers without a downpayment.  Quite frankly, there are none unless the buyer qualifies for a VA loan.  This mean that time is running out for buyers that might qualify under this program.  With the removal of this program, this financing incentive is no longer available reducing options to sellers to attract buyers. It's not too late!

The real estate has serious problems.

You need a realtor with serious solutions.

Call or email the Charleston Relocation Expert if you are ready to purchase a home or need marketing solutions to get your home sold.


Michele Reneau, ABR, GRI, CRS

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Comment balloon 4 commentsMichele Reneau • July 30 2008 08:56PM


We seem to be getting back to where we were before all the subprime loans began.  I think that is a good thing even if it does take away easy sales.  Thanks for your explanation.

Posted by Barbara S. Duncan, GRI, e-PRO, Executive Broker, Searcy AR (RE/MAX Advantage) almost 11 years ago

Thanks Barbara. I'm still really disappointed that the DPA is going away.  I've used that A LOT to help buyers.  The new tax credit is kinda hokey since it's more of a loan, albeit, interest free. 

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) almost 11 years ago

Hi Michele:

Thank you for your post and summary of the new bill.

A couple of points I would like to add for your viewers:

Downpayment Assistance- We have learned that according to HUD/FHA the "lender credit/loan approval" date is the key (that must be by October 1st). However, we are seeing that many lenders are adopting their own dates as far as when they will stop accepting loans with downpayment assistance - some stopped accepting loans with DPA as of yesterday so the earlier getting borrowers into underwriting the better. Hopefully a new bill (HR 6694) which was introduced the end of July will get DPA back one day.

Increased Loan Limits for Conforming - I wish it were different but the loan limit increase is really only affecting the designated "high cost areas" (as defined by OFHEO - the Office of Federal Housing Enterprise Oversight). In "normal" areas (none of South Carolina is designated as "high cost") the standard conforming loan limit of $417,000 still applies.

New Homebuyer Tax Credit- Here is my take on this. Get a $7500 check or refund as long as you meet all the necessary requirements(as a mortgage advisor I cannot provide actual tax advice or make any investment recommendations so please consult your tax and investment advisor). Hypothetically, if the $7500 was invested at 5% it could grow to over $15,500 in 15 years! There is also a simple way to minimize the effect of the yearly repayment (the $500) on a monthly cash flow basis so that it is not noticeable at the following years' tax time. Using the IRS website, a tax advisor, or even someone in the buyers' HR department that can be accomplished.

And you are correct - there will basically be only 2 options out there for true no money down financing (VA and USDA). Supposedly, the new FHA guidelines are going to allow for a second lien (so, instead of a gift from a family member the borrower would have a loan from that family member - although it must be a recorded note) so stay tuned. Of course, the lenders offering FHA would need to accept that as their guideline and no one is saying anything yet.


Posted by Andy Thorson (Northstar Mortgage Group - Mount Pleasant, SC) almost 11 years ago

Thanks for the additional info Andy!

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) almost 11 years ago

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