Fact vs Myth
MYTH: Non-profit downpayment assistance (DPA) is riskier than DPA gifts from family members or the government.
FACT: Default claim rates for homeowners with an FHA loan after three years: no downpayment assistance is 3%, family/government assistance is 5%, DPA is 6%. According to a report from George Mason University, those figures show "no statistically significant difference in the claim rates of DPA loans and FHA loans with other types of gifts."
MYTH: Non-profit DPA is bad for the economy.
FACT: Non-profit DPA contributes significantly to the U.S. economy. Between 2000 and 2005, DPA contributed a $24 billion net positive impact to the national economy.
MYTH: Non-profit DPA has limited impact on recipients and their credit.
FACT: Non-profit DPA has helped over 1 million Americans become homeowners. On average, those individuals have gained over $18,000 in equity.
MYTH: Downpayment assistance is a mortgage for people who do not qualify for other mortgages.
FACT: DPA is not a mortgage at all. It is a supplemental program that provides downpayment gift funds to people who qualify for loans with other parties, primarily the Federal Housing Administration (FHA) in accordance with their rules and guidelines.
MYTH: The DPA gift amount is added to the total home price.
FACT: DPA is a true gift to buyers. DPA programs do not conduct appraisals or communicate with any appraiser. All properties are appraised by HUD certified third-party appraisers. The sales price of the home must always be supported by an appraised value.
MYTH: Non-profit DPA programs are sub-prime or predatory.
FACT: Again, non-profit DPA programs are not loan programs at all. They serve the same population (96% overlap) as FHA's loan programs and exist to help buyers overcome a major barrier to homeownership. The overwhelming majority of non-profit DPA gifts are originated with highly regulated FHA loans.
MYTH: Homes purchased with non-profit DPA have high failure rates.
FACT: FHA users (who comprise 96% of DPA recipients) who purchase home with non-profit DPA have a 94% rate of successful homeownership.
MYTH: Non-profit DPA is a drain on American taxpayers.
FACT: DPA has generated more than $12.3 billion in taxes from new homes alone without a single tax dollar gifted to homebuyers. DPA gifts do not use any tax dollars.
