With housing prices going lower in almost every major city in the U.S. and with interest rates at historic lows, there has never been a better time for home affordability. Compare, if you will, when interest rates were near 20% in the 1980s — it took 45% of your gross monthly income to purchase a home. Since 1975, the average has been that 25% of your gross monthly income would go toward the purchase of a home. Currently, that figure is at 17%. As you can see, this means that there is less of your gross monthly income going toward the purchase of a home than ever before.
The major roadblock to purchasing a home, at this time, is access to credit. With a quarter of all mortgages in 2006 being subprime, the tightening of lending standards has eliminated 1/3 of the population from purchasing a home. FICO scores of 620 or better are now required for home loans. No longer can someone with a score of less then 620 get a loan to purchase a home.
You will also need 20% down in order to qualify for a loan. There are still some lenders that have products that require little or no down. Key Bank has a 0% down for first-time homebuyers with credit scores of 620 or better. Talk to their mortgage reps for more information. Washington State Housing Finance Commission also has a 0% down payment program for first-time homebuyers. Look in the resource section of this web site for a link to their website for more information.