Zero DownA zero down loan is good when you don't have enough cash to pay the down payment, and in some cases, the closing cost on the purchase of your new home. Zero down programs allow you to buy your home now, instead of waiting to save enough for a down payment. Here are a couple of options available for buying a home with zero down: - Get one new conventional loan at 100 percent loan-to-value (LTV). PMI* will be required, and the insurance charges are not tax deductible. Rates on this type of program are very similar to conventional financing with a down payment.
- Get an 80 percent first loan and a 20 percent second (piggy-back or 80/20) loan. This program does not require PMI, and all interest is tax deductible.
- Get one new non-conventional loan at 100 percent loan-to-value (LTV) with no PMI*. This type of loan will allowing for a slightly lower credit score requirement, and slightly higher than conventional rates instead of PMI. However, the higher interest charges are tax deductible.
Some zero down programs allow you to borrow up to an additional 3 to 7 percent of the purchase price to pay your closing costs. Ask your loan officer if you qualify for any of these programs. *PMI is an additional charge you pay if you make less than a 20 percent down payment. This insurance policy protects the lender in the event of a payment default or foreclosure, and the loan is not paid off in full.
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