With zero-down home financing, you can buy a home with very little money out of your own pocket. You won't have to put down $60,000 to $20,000 to get into your home. Instead, you'll only have to pay a few thousand dollars in closing costs. With no money down, you can also buy a vacation home without using up all of your savings.
When to choose a loan with no money down
A mortgage with no money down is a good choice for many people. For one thing, you can buy a house for about what you would pay in rent. You could...
With zero-down home financing, you can buy a home with very little money out of your own pocket. You won't have to put down $60,000 to $20,000 to get into your home. Instead, you'll only have to pay a few thousand dollars in closing costs. With no money down, you can also buy a vacation home without using up all of your savings.
When to choose a loan with no money down
A mortgage with no money down is a good choice for many people. For one thing, you can buy a house for about what you would pay in rent. You can save your money for moving costs instead of a big down payment. If you want to buy a vacation home, putting nothing down helps you keep your assets liquid and not tie them up in a property you don't need.
Choosing a loan with no down payment
There are two different terms for loans with no down payment. The most common type of mortgage with no down payment covers the full price of the home. All application fees and closing costs must still be paid.
The other mortgage with no down payment comes with fees of up to 3 or 5 percent of the loan amount. Because the loan amount is more than what the home is worth, it is harder to get these kinds of loans. Most of the time, you need a good credit score and cash on hand.
Putting no money down and skipping PMI
The extra cost of private mortgage insurance is one thing that makes it hard to get a home loan with no money down (PMI). Most conventional loans require you to keep this insurance until you have 20 percent equity in your home. This can be done by the value of your home going up or by making payments on the loan's principal.
You can avoid this cost by putting your loans together. You won't have to pay premiums if you get two mortgages, one for 80% and the other for 20%. You can get both loans from the same lender or from different ones.
How to Find a Good Lender
To find a lender who will finance with no money down, start by getting loan quotes for mortgages with no money down. Most online sites will let you know about rates and terms in a matter of minutes. If you have trouble getting a loan from a regular lender, you can try to get one from a subprime lender. They come up with more unique terms.
