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Down Payment Assistance Programs: How Programs Operate

How does an exempt organization's seller-funded down payment assistance program generally work?

The charitable organization provides the purchaser’s down payment funds to the escrow/closing agent before settlement.  At closing, the down payment assistance amount is deducted from the seller’s proceeds and remitted to the organization. Usually, the seller pays a service fee to the organization. If the property is not sold, the seller is not obligated to make any down payment assistance payments and some organizations refund the service fee.

Page Last Reviewed or Updated: 30-Apr-2013