No down payment loans for homes are more common all the time. Here is what they are and how to find them.
Having the option to find 100% financing is a good way for first time buyers to buy themselves a home when they are unable to afford a down payment. This kind of loan usually requires the security of private mortgage insurance.
So who is able to qualify for zero down loans? If you have good enough credit for renting a home using a rental agency, then your credit is probably good enough for one of these zero down loans. The alternative for many is just to rent an apartment or home because they can’t afford the necessary down payment to buy one.
Lenders are wising up to the fact that these people are the ones most likely to be good credit risks for borrowing home loans. They only have a problem with saving up the down payment. It’s not that their credit is bad, they just can’t swing the down-payment along with closing costs and the other expenses, but once they live in the home then making the payments will be no problem.
Additionally if they can get a zero down loan for buying their home they don’t have to pay any closing costs because their financing is 100%. This would be their first mortgage at 80% of purchase price and then their second would be for the other 20%.
If you don’t qualify for any reason for the zero down loan, then you need to look around for other available programs. You can find a few government guarantee programs where you can buy a home with zero down. Many are for families with low income and others are for rural homes. These government programs are quite competitive.
Maybe a VA loan could be your answer. They have the 100% financing with no money down. VA loans are among the best you can get. You don’t have to buy private mortgage insurance with zero down loans. That adds up to good savings every month.
You have no pre-payment penalties for paying off a VA loan early. Their interest rates are very competitive and you don’t need perfect credit. Having poor credit isn’t good but average credit will work.
Knowing where you should look to find a zero down loan is the key. You can find lots of organization designed to help first time buyers to buy a home without the down payment. The AmeriDream Program that works through the FHA is a good organization the will make down-payment grants to homeowners. They will help your search for your new home as well and assist with making offers. They also provide you with getting your loan documents in order and working with a good real estate agent.