First time homebuyer: what's my best approach?

I'm 23, college grad, and I have the same job that I've had since Jan 2005. I was an intern at this job until I graduated, and I've been full time employee since May 2007, earning $27,000, in Louisiana.

I've never owned or rented a house. I'm paying a car note (almost paid off) but my mom carried the loan. I've had 2 credit cards for 5 years and have never missed a payment (I always pay full statement balances). My experian credit score is 787.

Well, I'm having a hard time getting a home loan. I went to get preapproved at a credit union for a house i'm looking at that is around 95k (it isn't listed yet. the seller is a friend). I'm planning on offering more like 85-90k. My loan officer says that I have good credit, but not much history. When I talked to her last, she said that I could get 80%/20% financing, with a rate of 6.625% (sucks, imo). This is without a cosigner. She also mentioned home possible mortgages. Should I try a different lender? Advice?

Also, I understand that, though I have good credit, I do not have a firm establishment of credit. I realize that this will affect my ability to get a loan. That's not really my question. I just want to give you a feel for my situation so that maybe someone can steer me in a direction. Everyone is a first time buyer without much credit history at SOME point, right?

Unfortunately, based on the current application and the open interpretation ("abuse") of the credit scoring system - you are considered a "sub-prime" borrower. It's not about credit score - it's about assets and the overall ability to repay. Without assets - based on the current "credit crunch", illiquid secondary market and tightening underwriting guidelines - you probably won't be able to get much of a loan in this market.

The media has painted the current crisis on "sub-prime" lending and have gone as far as to say indicate that the "sub-prime borrower" is someone with a dubious credit history. Nothing is further from the truth as about 80% of Americans are currently classified as "sub-prime" having limited to no liquid assets. Ask around - how many people do you know have a 6 months of future income in the bank or invested? It's not about credit score - it is a combination of a number of elements.

If you were to offer 20% down and a co-signer - you might have a chance - I'm really surprised that the 80%/20% was offered to you as nearly all 100% financing have been scorned by congress and have more or less been put to bed by most major lenders.

Absolutely, try another lender. But go by this formula for buying a home: the mortgage amount should not be more than 3X your yearly take home pay. Remember there are a lot of other costs incurred with owning a home: taxes, repairs, utilities, insurance, decorating and home improvement. Remember to include them when deciding what you can afford.

You sure can try a different lender but thats just about what we all got for the first loan. Remember there is a big push not to lend money to people who can't pay it back. The subprime mess. It is good to put 20% down because you start off with equity in your house.

If i was you I would do one of two things wait and build my credit history or get a co-signer, only because my mortgage lender duked me with that 80-20 loan, you larger portion of your mortgage will be at a low rate and the smaller portion will be at a higher rate. The larger mortgage may also be a ARM rate which is an Adjustable Rate Mortgage

If you go USDA (Rural Housing ) with no money down and no mortgage insurance on a 90,000.00 mortgage, at 6.25% fixed for 30 years your P&I payment will be $556.00 ( rounded off). Based on your $2200.00 monthly gross and a 787 credit score this loan will be a slam dunk for some loan officer set up to do USDA loans in Lousiana. Property will need to be in an eligible area, but your income stats qualify.

CountryWide Loans is a good source with your credit score. You probably qualify for Nehemiah Assistance. Free3% down payment. Your house payment should not exceed 35% of your take home pay. 6% s/b your rate with good credit.
Check with a Realtor, they are your best contact at this point, after all it is free as well.

Credit Unions are good if you are a long-time customer. Credit Unions usually do not make their own mortgage loans, but act as a middleman for the loan. The more middlemen there are the poorer the mortgage loan deal.

Get some mortgage loan quotes off of the internet, and then compare the quotes to rates and terms in your local area. Remember the lowest interest rate does not necessarily mean the best deal. Also check the real estate section in your local newspaper, there are often listed current terms for your local lenders. The mortgage loan terms are often negotiable until you close the transaction. Add-on lender charges that seem unreasonable can be "waived" by the lender.