Megan,
I talked to my collegue, Jeff Brandsma, a mortgage consutltant, about the specifcs of your last question. Below is his response.
From Jeff Brandsma, Mortgage Consultant, Home Street Bank:
This is a great question because so many things in the industry are changing, it is hard for the consumers to keep up with the latest guidelines.
There are a few ways that buyers can get into a new home with little or no money out of their pocket.
1. VA guaranteed loan – 100% financing offered to members of the armed services who are eligible to receive VA benefits
2. USDA Loans – 100% financing program insured by the US Dept of Agriculture for low- to moderate-income buyers of homes in designated areas throughout the state
3. FHA Loans – standard is 97% financing, however the required 3% down payment can be a gift from an eligible donor*
4. Portfolio Loans – some lenders may still offer 100% financing using their portfolio funds**
*an eligible donor would be the borrower’s relative, the borrower’s employer or labor union, a charitable organizations, a governmental agency or public entity that has a program to provide homeownership assistance to low- and moderate-income families or first-time homebuyers, or a close friend with a clearly defined and documented interest in the borrower
**portfolio funds are a lending institution’s own funds that can be dispersed according to their own underwriting guidelines. Other loans are underwritten according to criteria established by an outside agency such as Fannie Mae, Freddie Mac, VA, or FHA
It is so important for potential buyers to contact a reputable lender early in the home buying process to determine what programs are available and what programs the buyer qualifies for. Not all lenders offer the same loan programs.
Hope this answers the question and is helpful. Each situation is so unique that it is hard to create a blanket answer that is absolutely true.