Posted by Ron (MD) on March 09, 2001 at 11:47:40:
The whole point of this program is to enable a seller to give a buyer more money toward closing. It is a legal loophole related to FHA loans.
I don’t think Nehemiah is used if the buyer is not getting FHA financing.
FHA limits a seller’s contribution toward buyer’s closing costs to 6% of the price. Also, I think FHA requires the buyer to have 3% (I think) of their own money in the deal (which can be obtained from family as a gift or borrowed from “approved” programs).
Nehemiah is a convoluted way for you to give the buyer up to 9% (the 6% closing cost help allowed by FHA plus an additional 3%). The way it works is, you give Nehemiah 4% and they “gift” 3% to your seller. Nehemiah keeps the 1% difference. So, it costs you 10% to give your buyer 9%.
If you are giving your buyer 6% (or less), I don’t think you need to go through Nehemiah (and give them the one point).
This is a program that I’ve never used because I usually give about 3% in closing cost help and never give more than 6%.