State Down Payment Assistance Poses Minimal Risk to the FHA

Brief

State Down Payment Assistance Poses Minimal Risk to the FHA

Abstract

In July 2015, the US Department of Housing and Urban Development’s (HUD’s) Office of the Inspector General (OIG) alleged that some state housing financing agencies' (HFAs') down payment assistance programs are violating FHA requirements and putting the FHA mortgage insurance fund at unnecessary risk. In this brief, we review the publicly available data to assess their concerns. We find that the number of loans for which a possible premium was charged is small and that state HFA DPA loans are net present value positive, not negative, to the FHA insurance fund.

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