Zero Down Home Loans Frequently Asked Questions

Because the typical first time homebuyer is unable to save thousands of dollars for a down payment, many home loan programs have been designed to assist financially. This allows more people to achieve their long awaited dream. Before writing off the possibilities of buying a home, consider the following.

What is a Zero Down Home Loan?

Traditionally, mortgage lenders required applicants to save about 20% toward the purchase of a new home. Before creative options, the majority of lenders only offered home loans for 80% of the purchase price. Thus, new buyers were forced to devote several years to building a cash reserve. Because of zero down home loans, buying a home with little cash savings is doable. For the most part, zero down mortgages are home loans that offer 100% financing.

Who Qualifies for 100% Mortgage Financing?

The number of lenders available to offer home loans is numerous. Hence, there is a suitable lender for every home buyer. Obviously, persons with great credit have more options. Nonetheless, having a low credit score will not justify a loan denial. On the other hand, lender options may be limited. Still, the majority of homebuyers can qualify for a zero down home loan.

What are Bad Credit Mortgage Loans?

If your credit score is below 620, the odds of qualifying with a prime mortgage lender are low. However, because banks and mortgage companies have varying loan requirements, the qualifying credit score for prime rates may be slightly higher – perhaps 650. Still, if a buyer is unable to get approved for a prime rate, a sub prime mortgage lender is generally able to get their application approved.

Sub prime companies offer home loans to persons with average and bad credit. Unfortunately, there are certain limitations. For this reason, getting approved with a score below 580 is difficult. If a buyer is approved with such a score, they can expect a super high mortgage rate.

How to Get Pre-Approved for a Zero Down Home Loan?

Before touring and making an offer on a potential dream house, consider the benefits of getting pre-approved for a zero down mortgage. By obtaining a pre-approval letter, this will place your bid ahead of other buyers. Furthermore, pre-approvals are perfect for knowing an affordable mortgage amount upfront. When applying for a mortgage loan, inform the lender of your wishes to acquire 100% financing. Upon doing so, the lender will match you with suitable loan programs. If your credit score is good, you may even qualify for 103% mortgage financing, which is perfect for paying closing costs and other home buying expenses.