This report details a HUD-sponsored study of how nonprofit downpayment gift providers are affecting home purchase and mortgage transactions. A new type of gift provider, funded by property sellers, has grown in recent years to where it is now present in over 25 percent of all FHA-insured single family home purchase mortgages.

The principal finding of this research report is that homebuyers utilizing such seller-funded nonprofit downpayment programs typically have effective loan-to-value ratios that are over 100 percent. The downpayment funding process is invisible to homebuyers, most of whom do not understand where the funds come from, nor do they understand that, in the end, they are effectively financing their downpayments. Read the report: Study on Downpayment Assistance .