In this new market there are still ways to buy a home with no money down or very little down. Some of these programs are great for buyers and others are just down right wrong.

As a first time home buyer it is hard to see the woods through the trees at times. Especially when it comes to loan programs. If you are a first time buyer that is going to be using a no or low down payment program then you will want to look very carefully at the costs of these loans in the long run. There are good and bad programs out there. The few that get used often or that I get questions about often are the USDA loans, FHA, Down payment assistance and Fannie Mae programs.

The USDA program has great benefits to it if your income qualifies and you are interested in purchasing a property approved for this financing. Your income does not have to be poverty level to qualify either. The loan program is by the USDA and you are allowed to come to the table with no funds if it can be done. Most of the time I see buyers close with a cost of under $1000.00. To search for these homes you have to go through the USDA website to find them. The website for them is www.rurdev.usda.gov . This will give you all of the information that you will need to know about the types of USDA loans and what you may qualify for. Rates for this loan program are at or lower than FHA loans. Currently the rate is at 4.5% today.

FHA loans were another great avenue for home buyers. The regulations have changed as of October 4th on the upfront mortgage insurance and the amount paid monthly as well. This has gone up significantly. Which means, in the big picture it may be in your best interest to pay 5% down instead of 3.5% and get a conventional loan. The mortgage insurance for a lot of buyers is going to be cheaper and there are no up front costs. You could be coming out about even AND your rate could be lower due to going with a conventional loan instead. The rate for an FHA loan is 4.25% for a 30 year fixed.

Down payment assistance can be a great help for a lot of people. The help varies from state to state. Make sure that you read the fine print on these to know what you are getting into. There are a lot of loan officers out there promoting these programs as free money. Some are and some are not. The ones that are not usually have a clause in the fine print that has you paying back a considerable amount of the down payment given to you when you sell the home. This can keep you in a home for over 10 years. This is fine if you are planning on staying that long. Reading the fine print on these programs can go a long way to helping you know that you won't end up with a huge bill when you sell the home later. There are no set rates since these are used in addition to other programs.

Fannie Mae Home Path programs are just plain wrong in my opinion. They are advertised to you to in a way that shows you all the options that you could qualify for but beware. There a many stipulations to these options. Most have to do with your credit score. If it is good then you can put 3% down possibly waive the appraisal and the mortgage insurance. That's great but you will pay in interest. If your credit is not so good they may require that you put down closer to 5%. You will have to pay mortgage insurance and pay for an appraisal. Oh, and your interest rate will be even worse! This program has so many double edged swords that you are bound to get nailed financially some where in the deal. There is a reason that most of the real estate agents that I work with know very little about this loan program. They know it is just not worth trying to sell to you and risk the bad business.

None of these programs are perfect but the more that you are educated about them the less likely you will end up with a surprise later. It's not that they don't help, but as we all know nothing is really for free.