Home purchases possible with only $500 out of pocket

Christina Campbell is a mortgage loan officer with Farris Mortgage.

HUD and mortgage investors have jumped major hurdles to make homeownership a reality for more families. The lack of funds for a down payment has been the biggest obstacle for first-time home buyers.

As of right now it has become possible to purchase anything from a single-family, owner-occupied property to a two-unit investment home with zero-down-payment programs.

There are families who probably think, "That may be an option for some, but with our credit we would never qualify." This is no longer true. Some credit issues can be overlooked while others are dismissed on a case-by-case basis with a verifiable explanation. There are even 100 percent loans available for credit scores of 600.

HUD currently has assistance programs available for a 100 percent FHA purchase. Programs such as Nehemiah and Ameridream allow for government-approved gift funds so that no down payment is needed from the buyer. The sellers can also pay closing costs, making the purchase virtually a "no money out of pocket" transaction.

For veterans, there is still 100 percent financing on purchases. This eligibility is not a one-time purchase just a one-at-a-time purchase. Federal Housing Commissioner John C. Weicher announced HUD's Fiscal Year 2005 budget is requesting an FHA zero-down-payment mortgage for first-time home buyers.

This would open the door for millions of families to finally stop renting, become homeowners and feel they are part of their community. This program would require somewhat higher mortgage insurance but it would phase down over time, and buyers would be required to attend a housing counseling class.

Outside of the government financing options, there is a plethora of zero-down-payment loans for single-family residences, second homes and investment properties up to two units. Among the loan types are 80/20 loans as well as 103 percent and 107 percent purchases, all three with no mortgage insurance required on owner-occupied properties.

While the above loans are available to prospective buyers with verifiable incomes, measures have been taken to provide loans for self-employed buyers as well. A 100 percent stated income loan has become an option for self-employed individuals. It is necessary to credit qualify for this program, and it is only for owner-occupied properties.

Increasing homeownership and creating affordable ways to do so have become a goal for the Federal Housing Commission as well as investors. The new wave of loan options and proposals is helping to spur the economy.

Although rates and mortgage insurance can be somewhat elevated, whether buying a new home, second home or investment property, the out-of-pocket expense has been reduced to around $500 or less.