Down Payment assistance?

If you are like most people, you recognize that now is the best time to buy a home- but unfortunately you don't have an extra $5000-$10,000 dollars just lying around for a down payment. So what do you do? Luckily, state and local governments across the nation have created "down payment assistance programs" or low- and no-interest loans for people just like you!

The number of programs, about 1,000 nationwide, have increased 3% to 5% in the last six months alone... Some banks are now far more willing to work with people who need down payment assistance, or were considered too risky 18 months ago. State housing agencies say that they're seeing the biggest spike in lender support since before the housing downturn and foresee this will continue to increase this year.

These programs specifically target low- and middle-income buyers who are brand new homeowners, or haven't owned a home in a few years. Typically, the programs offer up to $80,000 in loans with interest rates from 0% to 2% for people with little or no money to put down. And then, because participants often have to get their mortgage through the programs' preferred lenders, primary mortgage rates are usually about 1% lower than average interest rates. Surprisingly, these programs can be a better deal than FHA-insured mortgages, due to their required annual mortgage insurance, upfront fee, and possibly higher interest rates.

Even cash strapped states are finding ways to fund the programs because they find the programs boost homeownership, which lead to more jobs and higher home prices. "It promotes affordability, gets people into homes and improves the economy," says a spokesman at the California Housing Finance Agency.

There is no national database as of yet, but ask local mortgage lenders and realtors, check state housing agencies and local government web sites to find if a program is currently available in your state. Also, look for programs that offer grants – they may not be able to provide you with a lot of money up front, but you also don't have to pay the money back!