"The banks are not lending money, there's no money out there, no matter how strong you are, no matter how good your deal is, if you go to a bank today they virtually laugh at you if you're asking for money. They don't have money or they're hoarding money. . . The policy makers have to make the banks loan the money that they're giving to the banks. I don't know what they do with the money but they don't have any money to lend."
That makes a fantastic quote -- hey, I'm writing about it! -- but is it really true? No, not at all. I just received a commitment letter for a condo I'm in the process of buying. How did I do it? I had a credit score in the 700s and a down payment of 20% and I don't see anything wrong with not making loans available to people with no assets and a track record of an inability to repay loans.
And guess what? If you have almost no cash and shaky credit, you can still get a Federal Housing Administration loan if you're a first-time buyer. All you need is a 3.5% down payment and a FICO score in the low- to mid-600s. If your credit score is lower than that and you can't come up with a couple thousand bucks, that's a really good sign that you aren't ready to buy a house.
Yes, money is tight. Lending standards are higher than they were a couple years ago. But for people who are responsible and willing to work hard and save up a few thousand dollars for a down payment, buying a home is absolutely within reach.