Despite low interest rates and attractive pricing of homes, banks are still hesitant to lend to borrowers. When the Real Estate market was booming, lenders routinely loaned borrowers the full purchase price of homes. Today 100% loan programs that were once very popular pose a risk to lenders looking to hedge against borrowers owing more on a property than it is actually worth. Loan program’s maximum loan to value ratios are being cut by 5% across the board and the days of true 100% financing are gone. However there are ways to effectively do the same thing. For example, the “Nehemiah Program” which takes advantage of a new type of FHA loan. It works by starting with the borrower taking out a loan for 95% of the purchase price, like most loans today. The difference is the seller covers the difference (or down payment) as a “gift”. This allows the borrower to obtain financing that would otherwise not be possible. In today’s mortgage market interest rates and loan programs are constantly changing. It is very important that prospective borrowers and sellers are aware of the ongoing modifications so they are able to take advantage of them. (See Blog below for more on FHA Loans)