A golden opportunity: the Neighborhood Gold Program gives hope to first-time buyers.

After five years of dreaming of buying a home, Andre and Yanira Eames thought they had finally found a way to end the cycle of renting. With seven children, the Eameses agreed to lease a fixer-upper in San Antonio with the intent to buy it after one year. Leasing with an option to buy seemed like the perfect way for the couple to save enough money for the down payment since they had exhausted much of their savings caring for, and later burying, both their fathers within a two-year period.

Bit by bit they replaced bathroom pipes, refinished kitchen cabinets, repaired the central air conditioning unit, painted the interior of the house, laid carpet, landscaped the yard, and fixed the fence--while also setting aside money in a savings account. "Since we were planning to buy it, we invested money in it," says Andre, a 38-year-old government employee.

Unfortunately, three months before the lease ended, he and his 30-year-old wife, who is a housekeeper at the Brooks Army Medical Center in San Antonio, learned that the landlord was shopping the house around to other buyers. "When we found out he was going to sell the house from under us, we only had about $4,000 to $5,000 in savings," says Andre. All their plans were destroyed.

With Christmas right around the corner, Andre had to act fast. The former Army specialist wanted a house in the same neighborhood so the children would not be uprooted again, but the house also needed to be affordable.

Willie Mason, a real estate agent with Realty Executives of San Antonio, referred the Eameses to Trico Mortgage Services senior loan officer DeShawn Mahone. Mahone suggested that they apply to Neighborhood Gold (www.neighborhoodgold .com; 1-888-627-3023), an agency that markets down payment assistance programs for The Buyer's Fund Inc., a nonprofit organization based in Provo, Utah. The Buyer's Fund uses a special federal exemption that allows it to pay between 3% and 10% of the purchase price toward a buyer's down payment and closing costs. It also provides an insurance policy that pays the mortgage up to $1,500 per month for six months if the buyer is involuntarily unemployed during the first year of the mortgage. The seller reimburses the Buyer's Fund for the grant and pays an additional 1%, or $1,000, of the purchase price, whichever is less, to cover the nonprofit's expenses. (Sellers pay 10% of the grant amount when the grant is $10,000 or more.)

The Buyer's Fund, through Neighborhood Gold, arranged for more than $89 million in grants for 17,361 home buyers in 2002. Through May, the fund has assisted an additional 9,167 buyers with more than $47 million. Loan officers and real estate agents often refer buyers to the Buyer's Fund because Neighborhood Gold has quick online processing and no funding cap. "It's a great program for buyers," says Mason, who acted as an intermediate real estate agent for the Eameses. "But I don't do many deals through them because sellers usually don't want to take less than the asking price for a home. And if you raise the price, the buyer may not be able to resell the house later."

Neighborhood Gold offered the Eameses $2,500 toward a federally insured FHA mortgage.

To avoid the problem of inflated home values, which have plagued similar housing assistance programs, the Eames' mortgage broker, Trico Mortgage Services, had an underwriter scrutinize the loan terms. The Eameses also compared the $82,000 asking price for the 2,800-square-foot, four-bedroom home they sought against recent sales in that area.

"It was a steal," Andre says. "Houses in our area usually start at around $90,000 and go up to $140,000. The seller just didn't want the house anymore because his kids were grown." So the Eameses agreed to pay the full purchase price and accepted the grant. They only had to pay $800 in out-of-pocket expenses. Some buyers in the program pay nothing at all. "It helped us get the house without spending everything we had," says Andre.