"Also, the new requirement of 3.5% down for FHA doesn't take effect until 1-01-09. However, don't forget that 10-01-08 is the effective date for the elimination of Seller Funded DPA's and also marks the implementation the new Mortgage Insurance premiums for FHA."
Looks like seller provided gifts are coming to and end this October, but only from January you will actually have to put 3.5% down
One potential solution for this is to buy a property through a lease option, accrue credits (i.e. our company gives $100/month back in form of accruals) which ultimately form the dowpayment. So if you put down say 2500 and acrue 24 months of $100 each, you are getting to your downpayment. Click link for more details.
For the past 10 years I have kept on top of most zero down loan programs I would expect them to return, just don't know when.
You might have your agent check with some local banks, there is at least one that offers zero down that has some income restrictions and is for Marion county only.
However, there may be other options available for you depending on what you do for a living, non-profits in you area, etc. etc. You need to be in touch with several lenders. In Virginia, our state housing authority has a no money down program. There are also local funds for county and town employees.
I've heard a rumor, but it's not quite clear how this will work - we're still waiting on the Mortgagee Letter regarding further information on the recent legislation... but I HEARD that there will be a way for a buyer to get to the first time home buyer tax credit to use towards a down payment. Again - that's not in affect yet.
I think you've picked a tough time... we're in transition. The most common program is going away, and we don't yet know what will replace it - at least federally. Look for local opportunities. I expect banks will also come out with "grants" for first time home buyers. Time will tell. When one program disappears, another surfaces to take its place. Plus, there is action attempting to bring back the DPA programs to which you are referring.
Again - bottom line - start talking to lenders, lots of them. Ask your agent for a list of reputable lenders....unless you can find a house this week?