Both Freddie and Fannie offer a 3% down payment program with reduced MI via the Home Possible and HomeReady programs.
With as little as 3% down payment, a home buyer can qualify for 25% MI coverage, compared to 35% MI coverage in a standard conventional loan.
This means your home buyer can put as little as 3% down and have a monthly payment as if they put 5% down with the same interest rate!
Forget about trading an increased interest rate (.5-1% HIGHER) for down payment assistance through the state bond program. Your buyer will be financially better off and have lower monthly housing payment through HomeReady and Home Possible.