Bush Proposes Mortgage Products to Help First-Time Home Buyers

WASHINGTON — The Bush administration Monday proposed two federally insured mortgage products aimed at helping first-time home buyers with low or moderate incomes to access home loans.

In an analysis accompanying Bush’s budget proposal, the administration said it would propose legislation to create a zero-down-payment Federal Housing Administration mortgage program that would allow first-time buyers with strong credit records to finance 100% of the home purchase price and closing costs.

Under a second program, buyers with limited or weak credit histories could access loans under an FHA program that initially charges a higher insurance premium that declines after a period of on-time payments.

The White House also proposed an overhaul of the FHA’s premium structure that would move the system from a flat fee charged regardless of a borrower’s risk of default to a tiered pricing structure based on a borrower’s risk.