The new buzz word in the mortgage industry is "FHA Loan." What is it? Who can use it? What are the limits?
FHA, or the Federal Housing Administration issues loans which are insured by the federal government. These loans, which are issued by your local bank are offered to anyone, without income caps. They remain one of the only low down payment loans available in today's foreclosure ridden marketplace. In fact you may borrow up to 97% of the home's value. Each county sets different limits on the allowable loan size, with Brevard, Florida's limit being $291,250. Qualifying for these loans is relatively easy, provided you have steady income, a relatively low debt to income ratio, and the home you are purchasing is not a recently "flipped" home. Although FHA loans do not have a minimum required credit score, most issuing banks will set a low limit score. You are only allowed to have one FHA loan at any given time.
Ameridream, and other "down payment assistance" groups used to allow consumers to buy a house with no downpayment. The seller of the home would "gift" the 3% required downpayment to the buyer, and in some cases the closing costs as well. However the recently passed Housing Bill has done away with these programs, though some litigation is trying to bring them back.
These loans are intended for owner occupied properties, not investors looking to buy homes to rent or flip.
It is important to know that you still can buy a house with a small downpayment. And this is the perfect market for first time home buyers! Rates are still low, inventory is high, and prices are down! Combine a FHA loan with the $7500 first time home buyer "credit" and the market is even better. You don't want to be looking back, saying "I should have...."
Call your local mortgage broker for more limitations and information!