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.
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:
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)
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.
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.
and local government-backed mortgages
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.