Take Advantage of a No Down Home Loan Program

A zero down payment offer 100 percent financing option. It is particularly useful for first time home buyers who can not afford the down payment. However, this type of loan is risky. Most lenders will require you to secure the loan through private mortgage insurance or other security features.

Can You Qualify For a No Down Loan

If you have been accepted by a rental agency because your income and credit are sufficient, then there are greater chances that you can qualify for a no down payment loan.

In most cases, people who prefer to rent a home or apartment think that they do not have the ability to meet the 20 percent home down payment required by lenders. This is the reason why lenders have realized that a no down payment loan program could be a good option for new home buyers. For this reason, you should speak to a mortgage company to learn more about a no down payment program before you sign a lease contract.

The Benefits of Zero Down Payment Mortgage

A zero down payment mortgage provides plenty of benefits for first time home buyers. But it is important to know first some downsides of this program. First of all, you have to expect that the interest rate of your loan will be higher if you take a no down payment option. This is the price you need to pay for getting a loan that is not secured by a down payment.

However, it is still possible to get a competitive interest rate from a zero down payment loan. As long as you have an excellent credit, you will be able to negotiate with the lender for better interest rates.

A no down payment loan also gives you the privilege of not paying any closing cost. Basically, this means that you are getting more than 100 percent financing. Another benefit that the lender may offer is the possibility of giving you a piggyback loan. It means getting a loan that is equal to 80 percent of the home purchase. Then you can get a second mortgage that can amount to 23 percent of the purchase price.

Other Available Programs

There are instances when private mortgage lenders may not be able to help you with a zero down payment loan. In this case, you should look for government guarantee programs. Such programs are usually available for low income families.

Getting a government guarantee program may enable you to take advantage of zero down payment loans. Just remember that such programs from the government are highly competitive. You should carefully read the requirements of the program to determine if you are qualified for the government guarantee program.

Home buyers have a lot to gain from a zero down payments loan program. This type of loan is offered by several mortgage lenders. Compare the different programs of the lenders so that you can find the best deals on zero down loans.

Rob K. Blake, home loan expert and author, educates mortgage shoppers on finding local providers by state like Tennessee Mortgage Brokers and Lenders and provides reviews of national companies like Ashwood Financial.