How to Buy a House with Zero Down Payment

How to Buy a House with Zero Down Payment

If it is not enough to buy a new home on your savings account, doesn’t matter, whether you went on a vacation, bought a car that you always wanted or rented a plasma TV, there is a possibility that you can use – a zero down payment mortgage loan. There are several programs that you can take advantage of. So find a good mortgage broker and choose the one that suites you the most.

The first possibility is a 100% one loan. It can be done in two ways: either conforming (in order to get it you need to have a good credit history and full income documentation available, and to prove your income through W-2's and recent pay stubs) or sub prime (the one for those borrowers who can’t qualify for a conforming loan due to poor credit or problems with verifying their income).

Another thing is an 80/20 combo home loan; it will require two monthly payments to pay off your mortgage. Its advantage is that it doesn’t have any mortgage insurance on it since the loan to value rate is 80%. This will probably save you some $40 to $90 dollars per month comparing to a 100% one loan. However, it is a little more difficult to qualify for than the 80/20 combo home loan.

The third, and probably the best option you have (unless you are in the military) is a FHA mortgage loan. It is less risky for a lender because it is backed up by the government so the rates are rather low. There is also down payment assistance program on it that the seller may participate in which can liberate you from your 3% down payment required. Another great thing about a FHA mortgage loan is that the seller is the one that usually pays your closing costs. So, in conclusion you buy a house with no or very little cash spending right away.

If you are in the military or a veteran of the military you have another possibility. VA (Dept. of Veteran Affairs) sometimes can back up your mortgage. If you are eligible for this type of loan you will probably receive rather low interest rates and won’t have to pay any down payment. Above that, your seller will probably pay the majority of your closing costs. Again, this is a good possibility to buy a house not spending a lot of your cash or savings.

So, these are the most common programs for people who do not have a possibility or desire to make down payments when buying a house. Again, you don’t have to have a perfect credit history or a lot of cash to buy a home. You just need to be responsible and able and wanting to pay for your house. And of course, you need to prove all this to your lender. So find a good mortgage professional and go for house hunting!


© 2010, Jericho Mortgage — How to Buy a House with Zero Down Payment