Home-Payment Charities Threatened by Proposed Rule

The Department of Housing and Urban Development has proposed a rule that would bar certain home buyers from accepting gifts to help them make down payments on mortgages, reports The Wall Street Journal.

The rule would prohibit anyone who accepts a Federal Housing Administration loan from also accepting money from charity to cover the required 3-percent of their home’s cost upfront.

Some charities provide such payments to help the poor obtain housing, but a year ago, the Internal Revenue Service said it believes the down-payment funds usually benefit for-profit groups and should not qualify as charitable activity.

Supporters of the practice say that without the charity money, many people would not be able to afford a home.

Read The Chronicle of Philanthropy’s coverage of housing groups’ previous struggles with the IRS.

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