Loan Programs Offered to Lower Down Payments : Several Federal and State Agencies Will Provide Home Mortgages, but Put Ceilings on the Amounts

Although the government isn’t exactly giving money away, some state and federal agencies still offer attractive home financing terms.

FHA loans: More than 15 million people have bought homes with loans insured by the Federal Housing Administration since its inception in 1934. Their most attractive feature is their low down payments, usually 3% to 5% of the appraised value of the home.

Limits on the size of FHA loans vary by region, with the maximum amount for an owner-occupied single-family home being $101,250. Higher amounts are available for buildings with two, three or four units.

In addition to their down payment, FHA borrowers must also pay a mortgage insurance fee equal to 3.8% of their loan amount. The fee can either be paid up-front, or can be added to the loan and paid off over 30 years.

Virtually all credit-worthy borrowers qualify for an FHA mortgage, as long as the property meets program requirements. More information about FHA loans can be obtained from mortgage and real estate brokers, lenders and regional offices of the U.S. Department of Housing and Urban Development.

VA loans: About 26 million men and women who have served in the armed services since World War II qualify for loans guaranteed by the Veterans Administration. Certain others, such as officers in the federal Public Health Service, also qualify.

Most financial institutions will lend up to $144,000 under the VA program and no down payment is required, although the buyer must be able to show he can repay the loan. A funding fee of 1% of the loan amount must be paid by all borrowers, but can be tacked onto the loan.

The Veterans Administration sets a ceiling on the rates lenders may charge on VA loans, and they are usually about half a percentage point below rates on conventional loans. Mortgage bankers, brokers and the U.S. Department of Veterans Affairs have more information.

Even better terms are available to California vets through the California Department of Veterans Affairs. A Cal Vet loan can be obtained for up to $90,000, with a 5% down payment and modest $430 loan fee. Many veterans who live in more expensive areas borrow the maximum amount and then get a second loan from a bank for the rest of the needed financing.

Cal Vet loans currently carry a 7% interest rate. Although that rate can be adjusted, it rarely happens: It’s been changed only once in the last six years, when it was reduced from 8%. More information can be obtained from local branches of the Department of Veterans Affairs, or from the agency’s Sacramento headquarters.

CHFA loans: The little-known California Housing Finance Agency was created by the state Legislature in 1975. It provides fixed-rate loans with interest rates as low as 8.4%, and buyers can make a down payment as small as 3%.

Although wealthy people can’t get a CHFA loan, most Californians can. In most parts of Los Angeles, a family can earn up to $38,600 a year and still qualify; the limit is $47,000 in the poorest parts of the city. Lower limits apply in less expensive areas of the state, and higher limits are used in costlier cities.

Price limits vary, too. In Los Angeles, a CHFA loan can’t be used for a house that’s purchased for more than $129,900. In Riverside, the limit is $100,00; in costly Orange, the limit is $136,400.

Hundreds of other state and local governments across the nation operate programs geared toward helping people buy their own home. Realtors, lenders, nonprofit groups and government housing agencies have more details.