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.