In today’s economy, it is harder than ever to afford a new home, especially if like so many, you have been hit hard by the recession.
The housing market has taken a huge hit too though, and some of the low prices you see on new homes can look incredibly appealing.
If there were ever a time to buy at rock bottom prices, it is now. But how can you afford to buy at rock bottom prices when you yourself don’t have a lot of money?
Zero Down Still Available?
Zero down home loans do still exist in spite of everything. Since there are so many people in the exact same position you are, banks know that they need to provide some options for people. It is harder than ever for banks to sell homes, which is why the prices are so low.
Even though the bank would rather take less of a risk on you by having you pay a more typical 5-20% of the house price up front, the bank would rather take a limited risk than make no money at all.
That means not just anyone can get a zero down home loan, but if you look like you’re potentially a good investment, you may be able to get one.
How do you look like a good investment to the bank? Your first step is to make sure that you have good credit. Bad credit or no credit won’t get you a zero down home loan. If you do have good credit, there may be some options for you, like an 80/20 no money down loan.
If you go with this option, you’ll get a mortgage at 80% of the home’s price, and then you’ll take out an equity loan to furnish the last 20%.
Closing Costs Get In The Way
The other issue to consider is the closing costs. Sometimes you can afford the home, but not the closing costs on the deal. The first scenario would work for you if you could talk the lender into covering the closing costs.
Usually this doesn’t happen, but in today’s market sometimes lenders are willing to negotiate this point. If they aren’t, you might be able to get a mortgage for slightly more than the asking price on the home in order to help you pay the closing costs.
Finally, if you aren’t too picky, sometimes there are additional ways of procuring a zero down home loan.
Right now there is a USDA 100% Financing Program for which you can apply if you are willing to live in a targeted rural area. This deal includes zero down payment and some restrictions on income. You can also pay 6% of the purchase price toward the closing costs.
So if you want to buy a home, don’t give up on looking for zero down home loans, especially if you have good credit. If you don’t, work on establishing it.
Even if you are a first time home buyer, you may be able to get a zero down home loan. If you still have trouble finding a zero down home loan, look into the USDA program for rural areas. Good luck!