Hmmm … it does indeed look like there is a way to get a zero-down loan through FHA:
“On Sept. 28, the Housing and Urban Development issued its final rule regarding the use of seller-funded down payment assistance programs. This ruling stated that, effective Oct. 31, HUD would prohibit the use of down payment assistance programs that, in whole or in part, consists of funds provided by any of the following parties before, during or after closing of the property sale: the seller or any other person or entity that financially benefits from the transaction; any third party or entity that is reimbursed directly or indirectly by the seller; or any other person or entity that financially benefits from the transaction.
At that point in time, in order for a homebuyer to use a gift that was derived from the seller, they must have entered into a contract to sell and the contract must have been fully executed and the offer accepted before that date. The Nehemiah Program was excluded from the Oct. 31 date because of a settlement agreement entered into between the Nehemiah and HUD in April 1998. The Nehemiah Program was permitted to go until March 31.
As a result of the ruling making these assistance programs void and leaving homebuyers without down payment assistance, organizations such as AmeriDream and Nehemiah immediately filed lawsuits in Federal Court to challenge the merits of HUD’s rule and seek an injunction blocking the implementation of this rule. On Nov. 1, FHA sent notification that the U.S. District Court now has forbidden FHA to implement the discontinuance of down payment assistance programs. In other words, until further notice, down payment assistance is alive and well.”
