Buying a home for zero down can be accomplished, but may cost you more in the long run with all the additional fees and costs associated with this sort of loan.
Steps:
1. Ask lenders about any zero-down programs they have. Look in the yellow pages under “Banks,” “Savings and Loans” or “Real Estate – Mortgage.” Talk to the loan department of your financial institution or get a referral from a local real estate agent. You also may be able to find a mortgage online.
2. Contact the county housing department in your area. There may be some federally or locally insured/backed financing programs that have zero-down options.
3. Talk to your employer. If you are a police officer or teacher or belong to a large labor union, special financing assistance may be available to you through professional organizations.
4. Ask the owners of the home you’re seeking if they are willing to carry the loan. To compensate for paying no money down, you may want to offer more than the asking price or pay a higher interest rate.
5. Have good credit. Typically, when a borrower comes in with a zero down payment, the risk of foreclosure is much greater, so the lender requires a satisfactory credit history. Check with your lender about program specifications.
Tips:
Most zero-down programs have income limitations and are aimed at certain income levels.
Warnings:
When you get a zero-down loan, even if your credit and income are excellent, the interest rate may be higher to compensate for the additional risk of putting no money down.
When you put zero down, you will have to pay mortgage insurance. Mortgage insurance is not the same as mortgage interest and cannot be deducted on your tax return.
