Multiple Programs

It turns out there are a lot of different programs out there; the lender who came to talk to my last class reviewed three programs which may be used together. That includes money from the federal government and the county, but does not include money from the city in which you're looking, neighborhood-specific programs or money from foundations designated for certain areas. In some cases, $25-30K may be available. Per borrower.

Conventional loans require a credit score of 700 or above and/or a downpayment of 20%. Most of us with student loans don't have the 20%. There are VA loans for veterans and surprisingly, the Department of Agriculture has programs in some rural areas; at the break, our lender told someone who qualifies for both that she should check further as the VA loans have a fee that she doesn't think the Ag loans have.

Me? I'm looking at FHA financing, which is kind to those without great credit, doesn't require huge downpayments and may be available for people without great employment history. There are fees involved but the benefits of some available programs outweigh the fees greatly; while the downpayment required is 3.5%, half of that can be provided by programs but because the loan can't be for more than 100% of the sale price, the borrower must provide half. That's 1.75%, the amount of the fee; on a house costing $100,000.00, that's $1,750. Even I can manage to have that amount of money. This is money you must pony up yourself, though it may be given as a loan or gift from family, or may be withdrawn or borrowed from a 401K or IRA.

Excess money from programs for which you qualify goes to pay down your mortgage. The upshot? Because I live in an area with lower cost housing than many metropolitan areas, and housing prices have gone down, so long as I can find a lender, I should be able to qualify for programs and get a loan that is reduced to the degree that I can afford it.

Combined with the income tax reduction provided by a) the Federal Stimulus; b) mortgage interest, so long as that remains a deduction; and, c) one of the county programs, which 1) has a fee to get into but reduces personal income by 80% of mortgage interest paid, reduces tax obligation by the other 20% of mortgage income paid, and is valid so long as it's your homestead, buying a home now has huge tax implications. In a good way.