Facts About the American Dream Downpayment Act
A federal program to increase home ownership
On December 16, 2003, President George W. Bush signed the American Dream Downpayment Act, a new program that will provide grants to help home buyers with downpayment and closing costs. The proposal authorizes $200 million dollars for the program for the fiscal year 2004.
- To increase the homeownership rate, especially among minority groups, who have lower rates of homeownership when compared to the national average.
- To lower closing costs by approximately $700 per loan in order to stimulate homeownership for all Americans.
- Grant recipients must be first-time homebuyers with annual incomes that do not exceed 80 percent of the area median income.
Dollar Amount of Grants
- A maximum downpayment grant of $10,000 or six percent of the purchase price of the home, whichever is greater.
- The average subsidy is expected to be $7,500. It can be used for downpayment, closing costs, and other fees associated with the home buying transaction.
How It Differs
This program differs from other downpayment assistance programs. Home buyers using the federal program will receive a grant from the government. Traditional downpayment programs are funded by home sellers who agree to provide funds for buyers –but usually tack the amount "donated" onto the price of the house.
The American Dream program will be administered by HUD, and become part of its existing HOME Investment Partnerships Program, which seeks to improve the availability of rental housing and stimulate homeownership throughout the country.
American Dream is slated to start in the Spring of 2004.