With mortgage delinquencies on the rise, many lenders are tightening their standards, even cutting out 100 percent financing altogether. In some cases, even borrowers with great credit are having to work harder to justify loan amounts. So what options remain for folks with less-than-perfect credit who don't have cash for a down payment? We talked to people who got three kinds of loans —- and we also checked in with the lenders who helped them say goodbye to the landlord.

ONE APPROACH
... used by this couple

97 percent FHA plus 3 percent down payment

The buyers: Kira George, 25, an administrative assistant, and husband Yves Amani, 28, a fraud investigator for Verizon Wireless.

CHRISTOPHER OQUENDO/Special

Yves Amani and Kira George used an FHA loan to overcome obstacles to homeownership. They had so-so credit and didn't want to tap into their 401(k) accounts.

The challenge: Their credit was so-so; plus, they didn't want to tap their 401(k) accounts for down payment money.

The solution: They used an FHA loan of 97 percent plus got 3 percent of the home price through Nehemiah, the nation's largest privately funded down payment assistance program.

Who helped: Gary Rosenshein of Amtrust Mortgage Corp.

The bonus: The sellers had been relocated and were eager to make a deal, so they accepted a lower offer.

New home's location: Laurel Oaks in Lawrenceville.

Favorite thing about owning: "It's a great investment," Kira George says.

What's next: Enjoying their new hardwood floors

Advice: "I thought my credit needed to be exceptional," George says. "People should take the chance. They're building equity by owning a home."

How FHA loans work

Remember: They top out at 97 percent of the home price.

The Federal Housing Administration does not make loans; it insures them at a price that is more affordable than conventional mortgage insurance. Long the favorite of first-time buyers, FHA-insured loans got edged out in the late 1990s as home prices climbed and other lenders would lend more than the FHA would to subprime —- or riskier —- borrowers.

John Gay of HomeBanc Mortgage says FHA loans are making a comeback. "In our market, with as many homes for sale as there are, sellers are entertaining FHA offers more and more, especially with the fallout of the subprime industry," he says. "The shakeup in that market has forced people to go back to this loan program, which is great."

A lender offering an FHA-insured loan:

> Requires 3 percent from the buyer, but will allow funds from a down payment assistance program.

> Allows up to 6 percent in seller contributions.

> Does not require a minimum credit score (will consider alternative credit history, such as rent and utility bills).

> Will lend up to $252,890 in metro Atlanta.

> Offers competitive interest rates (within .125 percentage points of a conventional loan rate).

> Won't disqualify you because of a previous foreclosure or bankruptcy (but it must be at least 2 years old).

OR TRY FANNIE MAE
... as this woman did

The buyer: Linda McKelvie, 63, preschool teacher and veterinary assistant.

The challenge: She had no down payment money, plus several blemishes on her credit report.

CHRISTOPHER OQUENDO/Special

Linda McKelvie, 63, found Fannie Mae the solution to having no down payment money and credit blemishes. She used a 100 percent loan from the corporation.

The solution: She used a 100 percent loan from Fannie Mae, which has many loans to choose from. She used the MyCommunityMortgage program.

Who helped: John Gay of HomeBanc Mortgage Corp.

The bonus: The sellers were highly motivated, so they paid closing costs and prepaids. Also, McKelvie found out several blemishes on her credit report were invalid. Loan officer John Gay guided her through having the items removed.

New home's location: Rural area in Hiram.

Favorite things about owning: Privacy and the freedom to own her many pets.

What's next: McKelvie is continuing to improve her credit so she can refinance in about six months to get a lower interest rate.

Advice: "Check your credit rating frequently to make sure there's not something on there that shouldn't be," McKelvie says. "You can do it for free."

A closer look at the
... MyCommunityMortgage program from Fannie Mae

Fannie Mae is a private company chartered by Congress to support the housing industry. The MyCommunityMortgage program, designed for low-to-moderate-income borrowers, offers a lot of flexibility with regard to credit history and credit score and allows for higher purchase prices than FHA programs.

A participating lender:

> Offers up to 100 percent financing.

> Offers up to $417,000, the same as a conventional loan.

> Sets an annual income cap of $69,000.

> Allows seller to contribute up to 6 percent.

> Requires a minimum 620 credit score for 100 percent financing.

OR EVEN GET A SECOND MORTGAGE UPFRONT
... as he did

The buyer: Clarence Boston, 29, laboratory coordinator for Philadelphia College of Osteopathic Medicine in Suwanee.

CHRISTOPHER OQUENDO/Special

Clarence Boston moved into Carriage Point in Stone Mountain through the Georgia Dream Homeownership Program.

The challenge: Because of less-than-perfect credit, he had trouble finding an interest rate he liked. "I didn't think I'd find a program that would make the house I wanted to buy affordable," he says. Then he heard about the Georgia Dream Homeownership Program, which is not well-known.

Who helped: Bob Tschappat, Mortgage Counseling Services.

The bonus: His job in health care qualified Boston for an additional $2,500 on his interest-free second mortgage, for a total of $7,500.

Where he lives: Carriage Point in Stone Mountain

Favorite thing about owning: With a stocked neighborhood pond behind his house, the avid fisherman says his new home is his "ideal place."

What's next: He'll probably take advantage of the fenced yard and get a dog.

Advice: Don't assume your credit isn't good enough, Boston says. Go ahead and ask a Georgia Dream lender how you measure up.

A closer look at
... Georgia Dream Homeownership Program

The Georgia Dream program offers low-fixed-rate loans to low-and-moderate-income Georgia residents. To help with closing costs and the down payment, the program also offers interest-free second mortgages.

A participating lender:

> Offers up to 100 percent financing.

> Limits income to $58,000 to $78,000, based on location and household size, for first mortgage.

> Offers interest-free second mortgages of $5,000 to $20,000 to help with upfront costs. (Lower income limits apply, and the loan must be repaid only when the house is sold.) People who are eligible for more than $5,000 include those with certain jobs or who have disabilities or are in the military.

> Only considers buyers who have not owned a home in the past three years or who live in a targeted county.

> Allows a purchase price limit of $250,000 in metro Atlanta and $200,000 outside metro Atlanta.

> Federal Housing Administration: www.fha.gov or 1-800-225-5342

> Georgia Dream Homeownership Program: visit the Georgia Department of Community Affairs at www.dcaloans.com or call 1-800-359-4663 or 404-679-4847

> Fannie Mae: www.fanniemae.com; 1-800-732-6643

> County programs: Fulton, Cobb, DeKalb and Gwinnett counties are among those with their own programs that promote homeownership among low-to-moderate-income residents.

> Free credit report: www.annualcreditreport.com. This is the only place to get your credit report for free online.

> Credit score: The credit score used by most lenders is the FICO (Fair Isaac Corp.) score, which ranges from 400 to 800. You have to pay to get your FICO score. Fair Isaac's Web address is www.myfico.com.

> "Clark Smart Real Estate"; $12.99, www.clarkhoward.com

How does a down payment assistance program work? How is it legal?

Sellers would break the law if they just gave money for a down payment to the people buying their home. But there is a legal way around this rule. Here's how it works:

The seller can put money in a down payment assistance program. That money is equal to how much the seller will be contributing to the buyer at closing. The seller also pays a fee for using the program.

When it's time for the home closing, the down payment money is wired to the closing agent by someone from the program.