February 1st, 2018 7:12 AM by Jackie A. Graves
In the years leading up to mid-2007, it was easy to buy a house
with no money down as “zero down mortgages” and “100 percent financing home
loans” were the primary driver of the mortgage market.
loans were also the primary driver of the global financial crisis because many
were made without properly analyzing and documenting a borrower’s ability to
repay the loan.
the housing market is more stable, very strict laws are in place to require
lenders to prove a borrower’s ability to repay, and many low down payment
mortgage options are again available for borrowers.
review some of the options. In all cases, you can expect that your loan
approval process will be very strict, and you’ll have to submit detailed
personal, residence, and employment history as well as detailed documentation
on housing costs, employment, income, assets, and debts.
to federal law, lenders must prove to regulators that
they followed eight loan approval factors to ensure they properly verified your
ability to repay the loan.
Mae and Freddie Mac aren’t lenders, but they buy loans from lenders to help
ensure that lenders can keep making loans. This helps lenders take more risk on
creditworthy borrowers who might be light on cash.
Fannie/Freddie program many lenders use is a loan that allows first time buyers
— or buyers who haven’t owned a home in the past three years — to put just 3
percent down on loans up to $417,000, which equates to a home purchase price up
down payment can come from family gift funds or your own money, and you must
live in the home you’re buying and pay mortgage insurance on the loan. The
mortgage insurance can be cancelled once you achieve 22-percent equity in the
home by paying your loan down.
Fannie and Freddie, the Federal Housing Administration doesn’t make loans, but
rather guarantees them for lenders, which makes lenders more willing to take
risk on lower down payment borrowers.
an FHA loan, you can get a loan with 3.5 percent down and it will require more
expensive mortgage insurance than that of the Fannie and Freddie programs, but
the qualification guidelines are often less stringent, especially when it comes
to required reserves left over after the close. Read more details on FHA mortgage
loans were the most popular low-down loan immediately after the crisis, but
other options continue emerging that are more beneficial for borrowers, and
less risky for lenders.
again, the Veteran’s Administration (VA) doesn’t make loans, but guarantees
them for lenders, which makes lenders more willing to take risk on lower down
the case of VA loans, you can get financing for up to 100 percent of a home’s
value with no mortgage insurance. The national loan limit is $417,000, but can
go up to $1,000,000 in high-cost areas. VA loan limits for your area are
available on the VA site, and a VA lender can also give you local VA loan
loans also let you finance most of your closing costs, including appraisal,
credit report, title insurance, lender origination fee, recording fees, and
survey fees. These represent the bulk of the closing costs in most home
catch, of course, is that you have to be a person (or family member of someone)
who has served or is presently serving in the U.S. military. Read more to see if you qualify.
the mortgage industry is starting to see one percent-down mortgages emerge,
with QuickenLoans leading the way on this new product as of June 2016 by
enhancing the Fannie/Freddie three-percent down programs with their own
this program, you must have a credit score of at least 680 and earn less than
the median income for your area. If so, then you might qualify to receive a
lender grant for the other two percent so you start ownership with
three-percent equity even though you only put down one percent.
need to go through a full qualification process and take a course to determine
low-down programs have a lot of fine print, so the only way to determine if you
qualify is to complete a full profile with a lender. You can have an initial
conversation with a lender to determine basic eligibility, but because the loan
approval guidelines are so strict for all of these programs, it’s a good idea
a local lender and get pre-approved to see what types of loans you
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