Buying Your First Home: What's Stopping You?

By Gina Pogol
Mortgage Credit Problems Columnist

With all the reasons to buy property now, many Americans are frustrated by the obstacles that keep them from making their first home purchase. But there is help available if you know where to look.

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The Down Payment

According to the National Association of Realtors, the number one obstacle to home ownership is the lack of a down payment--it affects a whopping 82% of those who want to buy a home today but can't. You know that you could afford a mortgage, but it's impossible to save a down payment while taking care of rent and other obligations. And with the FHA loan requirements becoming stricter, you might feel home ownership drifting even further of of reach.

FHA Loans Can Help

Well, there is that home buyer tax credit--can you use it for your down payment? Yes, and no. HUD Secretary Shaun Donovan explains that you can "monetize" your tax credit by getting a loan from a housing agency and then put it towards your down payment--but you are still required to come up with 3.5% with your own funds. The $8,000 can be used only to increase the down payment on your FHA loan.

However, there are HUD-approved housing agencies that are allowed to lend you the money for your FHA mortgage down payment. The loans may even be interest free, and some don't have to be repaid until you sell the home. A recent HUD press release states, "Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their down payments via secondary financing provided by the HFA or non-profit."

Down Payment Assistance from Other Sources

FHA loan underwriting guidelines also state that an outright gift of the cash investment is acceptable if the donor is your relative, employer or labor union, a charitable organization, a government agency, or public entity with a program to provide home ownership assistance to low- and moderate-income families or first-time home buyers, or even a close friend with "a clearly defined and documented interest in the borrower."

Finally, if you live in a "rural development area," which includes over 60% of the land in the U.S., you may be eligible for USDA financing. These loans cover 100% of your purchase price--no down payment required.

So check into your local housing authority and other organizations, hit up your family, and get your new home while prices and interest rates are low. Fill out the form on this site to see what you qualify for. You may never have another opportunity like this.


http://www.hud.gov / http://www.realtor.org/

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