Facing a future with a pre-teen and just one bathroom, Debbie Medlin was looking for more space.
But Medlin had the down-payment blues. Her condominium was on the market, but she was concerned about getting enough for it to make a good down payment on the house she wanted to build.
When Medlin saw an advertisement pushing a 1 percent down program, it didn’t take her long to get back to her builder, Crossmann Communities Inc.
“When they told me about it, I kept saying `What’s the catch?’,” said Medlin, who is now buying a new home in a Crossmann development, Cumberland Woods in Fishers.
Medlin hasn’t found that catch yet. Under a non-profit program in which Crossmann and other local builders are participating, Medlin gets a gift of 5 percent down if she can come up with 1 percent.
It’s called the Nehemiah Program, run by a California-based not-for-profit organization committed to increasing home ownership.
Nehemiah provides the 5 percent down to qualified buyers. The sellers must agree to pay a service fee to Nehemiah equal to 6 percent of the final sales price.
Buyers do not have to pay Nehemiah back.
The program is named for the Old Testament figure who governed Jerusalem after rebuilding its walls section by section.
It was founded in Sacramento, Calif. in 1994. In 1997, it provided $4.8 million in down payment assistance to 950 families.
Buyers cannot have an income that exceeds 120 percent of the area median income. In Marion County, Ind., for a family of four, that income would be $61,320.
The buyer has to have the 1 percent down payment, and also qualify for a Federal Home Administration (FHA) loan. The buyer also must agree to complete a four-hour home buyer’s education course.
“If it’s just 1 percent, you have that. It’s hard to have that $5,000, $10,000, $15,000 in the bank,” said Medlin. “You have to go to a seminar, but that’s a small price to pay when they are giving you $4,000 or $5,000.”
“And I’ve got 6 percent down on it. I’m building equity with very little money.”
Local builders say they expect the Nehemiah program will help them sell a lot more homes.
“Imagine the number of people who can get into the house that might not have,” said Sue M. Harvey, who works in advertising and marketing for Crossmann.
“A lot of people have plenty of cash flow, but nothing in the bank. No money for the down payment.”
The program isn’t free for the builders, however. They have to pay in that 6 percent service fee.
Some are working that cost into the home pricing. Others are dropping incentive packages like free appliances, or doing a combination of the two, said David Hundley, regional adviser for the Nehemiah program.
In April, the U.S. Department of Housing and Urban Development gave nationwide approval for Nehemiah’s funding on FHA loans. Hundley said it caught on quickly in Indianapolis, after Crossmann picked up on the program from one of its companies located in Florida.
Now Hundley has 17 Indianapolis-area builders signed on to the program.
Hundley said Nehemiah is marketing the program to builders, in an attempt to get the word out to the public. The program also can be used on resale homes, if a Realtor is certified.
Realtors and sellers would have to work out pricing strategies that take into account the service fee, Hundley said, adding that Nehemiah officials say it’s likely most sellers under their program can get full market value.
