There are other forms of government assistance that do not include actually making a mortgage loan but help with down payments and closing costs. Down payment assistance (DPA) can come in the form of a restricted grant or a loan to the buyer. The most common restriction is that the buyer can make no more than 100 percent of the median income for the area. If the median income is $50,000 for the area, to qualify for this assistance you can make no more than $50,000. Other programs may even require the buyer make less than 100 percent, with some programs restricting the benefit to those who make 80 percent of the median income for their area.

DPAs will require that you be a first-time homebuyer. How do DPAs make that determination? The DPA will follow the lead from your lender who will look first at your credit report to see if there is an outstanding mortgage or that you had one in the past. Lenders can also review your tax returns for the previous three years to see if you have taken any mortgage interest deductions.

For purposes of qualifying a first-time buyer, lenders only go back three years to see if any interest deductions have been taken.

DPAs will approve your down payment assistance application and send the qualifying amount to the closing table when you go to close on your condo. The lender approves the loan and the DPA agency makes sure the approved loan meets its own criteria.

Some DPAs from government agencies will issue funds up to a certain amount, say $10,000 for first-time buyers. This can be a loan or an outright grant with no repayment until or unless the property is sold.

If s important to note that even though a DPA may be available, the mortgage program you select may not accept it. Many conventional loans still require the buyer to have a minimum of 5 percent in the transaction.

Again, FHA loans shine in this regard because they don't require buyers to use their own funds as long as the funds in the transaction come from a qualifying source.

DPAs are typically issued through state or local government agencies. You can find DPAs by doing a quick Web search. Many larger cities have multiple DPA programs, so do your homework to find the right one for you and your new purchase.

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