After the market crashed, zero money down mortgages were hard to come by, and the truth is, they still are. However, as a real estate agent, it was my job to help cash strapped homebuyers find solutions to their mortgage problems, whatever those problems may be. When it comes to no money down mortgages, there are four fixes that work (almost) every time, for almost every buyer.
Zero Down: VA loan
The Department of Veterans Affairs guarantees zero down mortgages for qualified veterans. However, these mortgages are not given direct from the VA. Private lenders originate the loans, and the VA guarantees the note -- similar to an FHA insured mortgage. Unlike FHA or conventional loans, however, there is no mortgage insurance with a VA backed loan, only a funding fee (from 2.5 to 4 percent), and even that can be rolled into the loan amount for most buyers.
Zero Down: Navy Federal Credit Union
Navy Federal Credit Union, offers 100 percent financing to qualified members when they are buying a primary home (or homestead). However, eligibility for membership to this credit untion is restricted to military service members, certain DOD civilian employees or their family members. Similar to a VA backed loan, Navy Federal also charges buyers a funding fee, but theirs is only 1.75 percent -- this can also be rolled into the loan.
Zero Down: Department of Agriculture
The Department of Agriculture's Rural Development (USDA) zero down mortgage guarantee program was popular with many of my buyers. However, I had to time it just right, as they are known to run out of money each quarter.
The caveat to this zero down mortgage is that the property has to be located in an eligible area. The USDA has maps online highlighting eligible areas. In addition to location, the USDA program has restrictions on household income and it's intended for first-time buyers -- however, I have seen several exceptions.
Zero Down: Neighborhood Assistance Corporation of America
Out of all no down payment mortgage options, this particular co-op program was hands down, my favorite. The Neighborhood Assistance Corporation of America (NACA) is geared toward helping buyers get the best mortgage, the best terms and get it all with little to no money for move in. To qualify, there are a specific set of guidelines (and a waiting list), but it's worth it. Homebuyers using this program came to the table educated about the process (NACA requires classes) and with clean credit. Most of my buyers moved in with no money out of pocket, and rarely more than $2,000 for closing costs.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More from this contributor:
- Navy Federal Credit Union