By Anne Straub
Gannett News Service

MELBOURNE, Fla. - Christa Urban and Jeff Willman had a loose plan: They figured they'd continue renting for a year or so while they saved some money, then start looking for a house to buy.

But then their landlord sold the home they were renting, and they found themselves looking for a home on a deadline and with no down payment.

"We just had a pittance in the bank," Urban said. "We weren't planning on buying a house, and, within 30 days, we had one."

Their purchase was made possible by a financing program that allowed them to borrow 103 percent of the home's purchase price. They financed the entire cost of the house plus part of the closing costs, and had to come up with just $1,500 in cash.

"In this day of buying a house, that is nothing," said Urban, a registered nurse who has owned homes before.

They bought the home out of foreclosure, paying $75,000. Their monthly payment is $50 more than the rent they paid.

"We went from a very small three-bedroom rental to 1,600 square feet," Urban said. "So, for $50, we got a lot for the money."

Years ago, people thought they couldn't consider buying a home unless they had saved at least 20 percent of the home's price.

"Now, there's been a lot more talk about how you don't need 20 percent, 10 percent or even 5 percent," said A.J. Adamczak, Central Florida regional sales manager for Wachovia Corp.

And now, thanks to some increased flexibility in loan guidelines, 100 percent financing should become more accessible.

Fannie Mae, the nation's largest source of money for home mortgages, announced recently that it is adapting its MyCommunityMortgage options to ease qualifying. The changes are part of the organization's $2 trillion American Dream Commitment, which aims to create 18 million new homeowners by the end of the decade.

"We have noticed a lot of changes in recent years," said Larry Mach, mortgage originator for Community Educators Credit Union in Rockledge, Fla.

No-down-payment or low-down-payment mortgage programs are opening the doors to homeownership for people who were disqualified by previous underwriting guidelines.

One qualifying factor that used to be more rigid is debt ratios. Borrowers wouldn't qualify if their total monthly debt exceeded 36 percent of their income. That's become more flexible.

"We get people qualified with 50 percent debt ratios, as long as their credit is good," Mach said.

The increased flexibility was designed to help Hispanics and other groups with relatively low homeownership rates, but also apply to any potential homeowner, said Nancy Sharifi, senior deputy director for Fannie Mae's Central Florida partnership office. "Many families can show they have been very responsible in paying rent and paying bills," Sharifi said. "It's just very, very difficult, in the income bracket they're in, to accumulate a down payment."

The changes:

• Only three, instead of four, lines of nontraditional credit are required to show creditworthiness. Applicants can use records of car insurance, rent, day care and other payments to show credit if they don't have a traditional credit history.

• Co-borrowers need not have established credit for their income to count toward the loan. So the income of a spouse who works part-time can contribute to the income required, even if that spouse has no credit history.

• Boarder income can count as part of household income. New immigrant families and others just starting out often take in boarders to be able to meet the rent, Sharifi said. Now, the income from the boarder can count toward the loan.