Some first-time homebuyers who cannot qualify for a regular mortgage may be able to obtain a loan through a program run by the Federal National Mortgage Association (Fannie Mae).
The Community Home Buyer's Program was actually designed to help low- and moderate-income buyers, according to Geoffrey Smith, housing director for Fannie Mae's Northeast Regional Office in Philadelphia. He says that, typically, about two-thirds of the borrowers in such Fannie Mae programs are first-time buyers.
A key benefit of the program is that borrowers may spend up to 33 percent of their gross monthly income on housing payments (mortgage, taxes, insurance and condominium fees), compared with 28 percent under standard mortgage plans.
Total debt payments may be as high as 38 percent of gross monthly income, compared with 36 percent in standard mortgage programs.
The Community Home Buyer's Program also does not include a common requirement that buyers have two months' worth of mortgage payments in reserve after closing.
Under one option available under the program, part of the down payment may be a gift from the buyer's relatives -- a big help to buyers who are having trouble scraping together a down payment. On a 5 percent down payment, for instance, 2 percent of the purchase price (40 percent of the down payment) may come from relatives.
To qualify, a borrower's income may not exceed 115 percent of the median income in his or her area. In the Philadelphia area, the median annual income (meaning that half the households earn more and half less) is $41,200, so buyers can qualify if their incomes do not exceed $47,380.
Participants in the Community Home Buyer's Program are required to take a series of home-buyer education classes. Mr. Smith says the classes help buyers understand how to budget for a home, how the loan process works, how to maintain a home, and whether buying a home is the right thing for them.
To obtain a free pamphlet on the Community Home Buyer's Program and a list of participating lenders, write to Fannie Mae, Public Information Office, 3900 Wisconsin Ave. N.W., Washington, D.C. 20016. Or call 800-7-FANNIE (800-732-6643).