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Kip Tips

Mortgage Lenders Relax the Rules

If you have good credit and a stable job, you've got options.

In the wake of the mortgage meltdown, home buyers with a down payment of less than 20% were limited to borrowing from the Federal Housing Administration (FHA), which offers mortgages with as little as 3.5% down. You have more options now. Lenders are still tough on borrowers, but if you have good credit and a stable job, you may qualify for a low- or even a no-down-payment mortgage.

See Also: Cash In on the Housing Rebound

Lenders will make loans (and private mortgage insurance companies will insure) with 5% to 10% down, provided you meet all other, still-conservative loan criteria, such as requirements for credit score, debt-to-income ratio and supporting documentation. You must pay for private mortgage insurance (PMI), but it may prove cheaper than FHA's insurance.

A few lenders even offer 100% loans. The Navy Federal Credit Union’s HomeBuyers Choice program offers zero-down mortgages (up to $1 million) with no PMI to its members in all branches of the military throughout the U.S. NASA Federal Credit Union offers a similar program (up to $650,000 with no PMI) only to members in Maryland, Virginia and Washington, D.C., but it may expand the program.