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No Money Down Home Loans
Until recently, no money down mortgage
loans were unheard of. In the past, the standard down payment
for a home was around twenty percent. With the ever-increasing
costs associated with housing today, many prospective homebuyers
cannot afford twenty percent of the home’s value. For this
reason, lenders have become much more flexible in the type of
loans they offer. A no-money down mortgage loan, also known as
a zero- down mortgage loan, allows qualified prospective
homebuyers to finance one hundred percent of the home’s purchase
price. First time homebuyers can take a considerable amount of
time to accumulate a down payment. By obtaining a no-money down
mortgage loan, they can secure the home before it appreciates in
value. As the average amount of personal debt continues to
increase, no-money down mortgage loans are becoming more
appealing to consumers. The interest paid on a no-money down
mortgage loan is also tax deductible.
Private Mortgage Insurance
One of the main disadvantages of a no-money
down mortgage loan is the private mortgage insurance that many
lenders require. It is not uncommon for lenders to
require private mortgage insurance on any
loan that does not meet the twenty percent down payment
standard. However, if you do decide to purchase private mortgage
insurance, it can increase the amount of home loan that you
qualify for. By obtaining a private mortgage insurance policy,
you are considered less of a risk to lenders. When a homeowner
reaches a certain percentage of equity in the home, the lender
is required to cancel the private mortgage insurance. Twenty-two
percent is that standard rate of equity that must be reached
before lenders cancel the policy but some lenders may agree to
cancel the private mortgage insurance before it reaches that
level.
Piggyback Loan
If you do not qualify for a no-money down
mortgage loan without purchasing private mortgage insurance, you
may want to ask your lender if they offer piggyback loans. A
piggyback loan allows homebuyers to receive two separate loans
to cover the cost of the mortgage. The first loan is granted for
eighty-percent of the home’s value. The second loan covers the
remaining twenty-percent. These are often referred to as 80/20
loans for this reason.
Here are our recommended sources for mortgage lenders online who have no money down programs:
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Online Mortgage Companies:
Are you in the UK? Visit Our UK Loans Page:
UK Lenders |
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