Even with the current economic conditions or the credit crisis as the media is calling it. You can still buy a home with little or no money, with less than perfect credit. There are three programs available that don’t even look at your credit score, and require little or no money down. Here they are.
FHA loans are insured by the Federal Housing Administration. This program has been around since the 1930s and was designed to improve home ownership in America and reduce down payment requirements. Guess what it worked and is still working. This is very secure program, and pretty easy to qualify for. FHA does not have a minimum credit score. The underwriter is looking at your payment history no your credit score. This is very important basically what this means is that if you have not had any collections, judgments, or bankruptcies in the last 24 months you have a very good chance of qualifying. If you have had any of these and can document an extenuating circumstance you still may qualify. FHA does have a down payment requirement of 3.5%, but in comparison with a conventional mortgage of at least 5% it is still very low. Plus with FHA the down payment can come from a gift. The gift can be from a friend, employer, relative, or a community or government grant. FHA has an upfront mortgage insurance premium, but it can be financed in to the loan. FHA also requires monthly mortgage insurance. The monthly MI rate is .55%, but this much lower than most conventional mortgage insurance rates, especially if you have less than perfect credit.
USDA’s RDA is a rural development program. This program allows for a 102% financing. This means it requires no down payment, and you can even finance some of the closing cost. It has very similar guideline to FHA. The underwriter is not looking at your credit score, but your payment history. Same as FHA as long as you have not had any collection, judgments, or bankruptcies in the last 24 months you have a very good chance of qualifying for the mortgage. RDA does have an upfront mortgage insurance premium of 2% but it is financed into the loan. The RDA however does not have any monthly mortgage insurance. However unlike FHA the RDA program does have income restrictions. Also you are limited to certain counties, but it is available in all 50 states.
VA loans are insured by the Veterans Administration. It is only available to eligible Veterans. However if you are a Vet and have a certificate of eligibility this is the program from you. Once again the VA does not look at credit score. They look at your payment history. It is a 100% financing, and no monthly mortgage insurance. The VA does have a funding fee of 2.15% however if you are disabled because of your service to our country this funding fee is reduced or waived all together. The VA determines what your funding fee is.
All of these programs are government back.
The best part is they all very competitive interest rates. Mortgage interest rates change daily, sometime multiple times a day. But it is not unusual for all these program to have at least the same rate as conventional loan for people with excellent credit, and sometime even better rates.
