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A helping hand for mortgage down payment

For many people, the lack of a down payment is the greatest hurdle to homeownership. This is especially true for first-time home buyers and low-income consumers.

Today, however, lenders offer numerous special loan programs that require less money down or feature other benefits. Some target first-time home buyers while others primarily help people who don't make much money.

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If you need extra help getting into a home, you should check with your bank or financial institution to see if they offer any of these special mortgages. State housing agencies, local HUD offices and Consumer Credit Counseling Service branches can usually provide references, too.

Here's a brief summary of some of the more popular programs to get you started:

Department of Veterans Affairs (VA) mortgages
Backed, but not issued, by the U.S. government, VA loans help veterans and their spouses purchase homes. No down payment is required (except for relatively expensive properties) and other benefits may apply. The government says it is more understanding than conventional lenders toward borrowers who default.

Federal Housing Administration (FHA) mortgages
Administered by the Department of Housing and Urban Development (HUD), FHA loans are backed, but not issued, by the U.S. government and feature easier credit qualification, down payment and underwriting standards than conventional loans. HUD collects mortgage insurance payments from borrowers and ensures lenders full payment if those borrowers default.

Rural Housing Service mortgages
The Department of Agriculture provides low-interest, no-down-payment loans to farmers and other qualified borrowers with low to moderate incomes buying property in rural areas or small towns who are unable to obtain loans elsewhere.

State and local government-backed mortgages
Many state and local housing agencies sponsor programs to help first-time home buyers who meet specific income guidelines or who are willing to buy homes in certain locations. Loans feature low down payment requirements, subsidized interest rates, help with closing costs and other benefits.

-- Posted: May 16, 2005
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'05 Real Estate Guide
30 yr fixed mtg 3.60%
15 yr fixed mtg 2.77%
5/1 jumbo ARM 3.26%
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