Buying a house with little down is still pretty easy in Colorado Springs. It is true that there are some programs that are no longer offered, like the old “80-20” 100% financing, along with “stated” income loans and other “sketchy” financing tools. Conventional financing for 80, 90 and even 95% loan to value has not changed a lot, although conventional programs now cost a little more if your credit score is below 720. But low down payment financing is still pretty readily available and here are some of the ways we currently do it.
1. VA. The Veterans Administration has been guaranteeing loans for active duty and honorably discharged members of the military since after WWII, and with zero down payment. This is particularly attractive for the 1st time homebuyer, since fees are a bit lower with 1st time use.
2. FHA. These are government guaranteed loans, for civilians. This program now goes up to $325,000 loan amount in El Paso County (which covers almost 4000 homes for sale as of 5-6-08, or 2/3 of our market!), requires only 3% down, and can be combined with down payment assistance programs such as CHAFA, gifts from relatives, or even Nehemiah gift down payment assistance programs to make this type of loan possible with as little as $0 (ZERO!) of the borrowers own funds (depending on the program). Moreover, it allows the borrower to make payments as high as 43% of their GROSS income, and does not strictly rely on FICO scores (though a 620 FICO seems to help). This type of loan will likely increase in popularity for a while.
3. My Community loans. These loans can go up to 97% of the purchase, and depending on circumstance can go as low as a 580 credit score. You have to make less than $66,000 as a family to get in on this in El Paso County, and it is designed for lower to mid income levels with OK credit.
4. Flex 97. This is essentially 3% down conventional financing, and with higher FHA loan limits, is not really as popular as it used to be. Still, when you consider that to rent a house for $1500 a month costs almost $4500 to move in to begin with (1st months rent, last months rent, plus deposit), for the little bit extra cash, you may as well own a place, right? And your first payment can be due almost 2 months away depending on when you close.

Need some help to figure out what makes sense for you? Call Dana Hines at Colorado Online Mortgage 719-955-3670 to figure out what program makes the most sense for you!