In it's normally narrow minded approach, the federal government once again makes into law something that should have had way more input and thought process before it was inked into legislation. In a struggling housing market and economy, to simply cast all DAP's as inherently bad is just wrong. So many credit worthy buyers were using this program, but now there are no alternatives, which means the affordable housing initiatives will go by the wayside. This program could have easily been amended to allow DAP's when the borrowers credit history, income and financial picture warrant them to be a low risk. FHA always has and still allows an FHA borrower to have absolutely $0 into a transaction if they can get a gift from a parent or relative. What's the difference if the gift comes from them or if it comes from another source. It doesn't change the borrowers credit worthiness and risk factor. Why should a borrower who doesn't have "blue blood" in their family tree be excluded from taking part in homeownership. These DAP programs are considered borderline legal by FHA so they just lumped them in as high risk and axed the whole program. The government also backs VA loans for our veterans and they require $0 from the borrower too. Is a policeman, fireman or teacher any less of a hero than our soldiers? Shouldn't they have the opportunity to purchase a home with limited funds if they are credit worthy.There is talk of revitalizing it to be more risk based, but who knows when that will happen. We need government to stop the bi-partisan bickering and approve legislation that makes sense.

While in spirit, I agree with what you say, I think you are missing the bigger picture. A person who buys a home with no money of their own, has no incentive to stay and pay. If their families put money in via a gift, they still feel some obligation to continue payments to preserve their families' cash. For heaven's sake, even apartments require a security deposit. If a person has no funds to purchase a house, they shouldn't. What is so awful about renting?

Homeownership is not a right, it is a privilege. You need to demonstrate that you can manage it; a down-payment is one such way. This idea of letting everyone get a mortgage is what started this whole mess.

What you say does have some merit and there should be some money into a transaction. However, it's not possible every time. Let's say a young doctor or professional who is just starting out and short on cash, but has excellent credit wants to buy into Baltimore, your advice would be to just rent. What would happen to the tax revenues if all buyers were required to have 5 or 10% down payment. Would we have communities of just renters. $0 down payment programs have been in existence for over 40 years or more with minimal problems. It's not the $0 cash programs that have caused the issues, it's the combination of that, Option ARMS, greedy lenders lending to un-credit-worthy buyers and falling home prices that are to blame. There is no reason to totally obliterate a program that could help so many as long as it is used prudently and awarded to buyers who meet strict criteria. If you think everyone should have a downpayment, then you should demand that your legislators immediately repeal the VA loan guidelines allowing $0 cash outlay since there is absolutely no difference.