One of the ways that some borrowers have been able to get into homes is through what are known as down payment assistance programs (DAPs).
True gifts, that are not expected to be paid back, are acceptable for FHA home loans. Unfortunately, many DAPs these days are actually loans in disguise -- and they come from people who are very interested in the transaction going through.
Even though the FHA is supposed to be cracking down on DAPs, this isn't happening. Indeed, reports Calculated Risk, 34 percent of $200,000 home loans backed by the FHA this year are involved with DAPs. This is an increase from 2003 and 2000.
Watch out for DAPs being pushed as "100% financing" by sellers and homebuilders. Instead, if you are getting a gift to use toward your mortgage financing down payment, look to family and friends, and the government.
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