it comes time to plunk down a 10% or 20% chunk of your home loan in cash, the
down payment can really get you down. In fact, it scares many first-time home
buyers away from pursuing the American Dream.
Fannie Mae, the federally
chartered corporation that purchases loans from lenders, is trying to lower the
financial barriers through a program called the Community Home Buyer's Program.
Four specific loan programs offer various reduced down payment options that can
get you into a house for as little as 3 percent down, according to Jim DeBoth
in The Journal Newspapers.
Start-Up Mortgage. You pay 5% down for this 30-year,
fixed-rate, graduated payment mortgage, with interest-only payments in the first
year. Although none of your monthly payment goes toward principal or building
equity in the first year, the advantage is you get to deduct the entire monthly
payment from your taxes, since mortgage interest is deductible. The catch? None
of the 5% down payment can come from a grant, family gift or another loan--it
has to be money you saved.
3/2 Option. This option lets you dip into the family
treasury a little. 2 percent of the down payment may come from a grant, family
gift or another loan while only the remaining 3 percent must come from savings.
The term ranges from 15 years to 30 years at a fixed rate of interest.
97. Here's a deal--only 3 percent down total. But it has to come from your personal
savings. Fannie 97 is designed for people with low incomes and a good credit history.
Borrowers can use gifts, grants or loans from family members or various programs
or agencies--such as housing authorities--to help cover closing costs.
Neighbors. This program is designed to encourage home ownership in designated
central urban (min. population 250,000), areas with higher minority populations,
or neighborhoods with a median income at or below 80 percent for the particular
All programs except Fannie Neighbors are geared toward
low-income families. Check with your local lender because income limits are set
according to the local economy and housing prices.