Below are programs from most to least common for easy review:
Opportunity: A mortgage with as little as 3.5% down payment for an owner occupant home purchase.
Qualification: The Federal Housing Administration (FHA) insures these mortgages to create this program for middle to lower-income home buyers. Applicants with credit score >580 may qualify with minimal debt. Mortgage and purchase price limits vary by county and type of property across the US and are available at www.hud.com. Borrowers are subject to Private Mortgage Insurance (PMI) if the down payment is <20%.
Conventional 97 LTV mortgage
Opportunity: Down payments as low as 3% on single-family homes.
Qualification: The mortgage limit is $421,000, you must occupy the property and have not owned a home the previous three years. Applicants must have a credit score >620. Private Mortgage Insurance (PMI) will be required until equity reaches 20%.
Energy-efficient mortgage (EEM)
Opportunity: A government program that allows you to borrow money to pay for energy-efficient upgrades. Your down payment will not increase, monthly payments will be lower, and the value of the home should increase.
Qualification: An upgrade (double paned window, HVAC, insulation, water heater, etc.) qualifies if the total cost of saved energy over the useful life of the upgrade is greater than the improvement upgrade. To assess home energy efficiency before improvements, you’ll need to complete a Home Energy Audit or Assessment.
Good neighbor next door mortgage (HUD)
Opportunity: Single-family homes at a 50% discount available to pre-K-12 teachers, law enforcement officers, firefighters, and emergency medical technicians.
Qualification: You must remain in a qualifying career and at the home as your primary residence for at least 36 months.
The HomePath Ready Buyer Program
Opportunity: 3% in closing costs assistance.
Qualification: You must purchase a foreclosed Fannie Mae property listed at www.homepath.com, and a homeownership education course is required.
Opportunity: 0% down payment, low (as low as 1%) interest rate for rural property owners.
Qualification: The United States Department of Agriculture (USDA) ensures these mortgages to create a program for “Rural” (town under 20,000 persons) owners. Applicants with low(er)-income and a credit score >620 will qualify for the maximum benefit, while those with credits scores <580 may still qualify but will receive a higher interest rate. The home must be less than 1,800 square feet and an assessed value below the area mortgage limit. To apply for a USDA mortgage, contact a guaranteed mortgage specialist in your state. More details at www.rd.usda.gov
Opportunity: 0% down payment and $0 private mortgage insurance for owner occupant properties
Qualification: The Department of Veterans Affairs insures these mortgages to create this program for active or retired military service members or surviving spouses. Applicants are usually required to have a credit score of >620. Limits on mortgage amount and purchase price vary by county and type of property across the country and are available at www.va.gov. A one-time funding fee is required that varies but is a small fraction (1-3%) of what a down payment would be in conventional circumstances.