I've run across several people lately who would like to buy a home but who also tell me they are struggling with credit score issues and down payment funds.  For these folks it might make sense to look into FHA financing, which has lower thresholds than conventional financing products right now for credit scores and down payments.   Depending on who you're talking to (lender-wise) the minimum low score will be either 600 or 620, I've heard both thrown around recently from 2 different lenders.

For 2009 the minimum down payment level is 3.5%, just up from 3% last year, but that's still a sight better than many conventional products that require from 10-20% down.  And, while our prices in the Puget Sound region have softened, we are still considered a higher priced market than many so coming up with those sums is quite a bit of saving. Sadly, sellers can no longer contribute towards a buyers down payment, but programs like Nehemiah are fighting at the federal level to return some of the down payment assistance programs to the real estate world.

FHA loans are good for all manner of residential financing including condos, townhomes and single family homes so it certainly is worth considering if home ownership is on your list of priorities this year.  Couple it with the $8,000 tax credit being offered this year, it's a nicer deal than we've had in the recent past.

During the high flying days of strong market appreciation and exotic loan products FHA only had about three percent (3%) of loan market share and that has risen again to 30% because all of those exotic loan products went away.