In addition to other government programs that are available for everyone, first time homebuyers may take advantage of government bond money.  This program is sponsored by mortgage companies.  Participating companies buy a specific amount of bonds and must use all of it.  For example, if they buy a $10 million block of bonds, they must use these funds until they are depleted.  Since this provides some risk, only certain mortgage companies offer these moneys.

For participating homebuyers, 4% of the purchase price may be covered by bond money, traditionally 3% towards the down payment and 1% for closing costs.  This is another example of a zero money down loan.

The government traditionally issues these bonds when interest rates are less than favorable for the first time homebuyer.  The lower interest rates stimulate the economy by providing the new homebuyer with the ability to qualify for a higher purchase price than they would normally be eligible for.

There are a few things buyers should consider when using this program.  First, as with any loan, the buyer must meet specific criteria, such as income guidelines, nominal credit history, and so forth to qualify.  Additionally, as long as the home is not resold in the first nine years, these moneys don't have to be repaid.  If the home is sold before this deadline, the buyer will be required to repay a prorated portion of the 4% grant.

Remember, these programs are only available through participating mortgage companies.  Contact your real estate professional for more information on government bond money.