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Zero Down

What is Zero Down?

Some mortgage programs allow for borrowers to put nothing or "zero down" down when buying a home.  It become a very popular way to purchase home in California as well as other states.  A zero down loan is good when you don't have enough cash to pay your closing costs and make a down payment on the purchase of your home.

Mortgage programs that allow for zero down payments allow you to buy your home now, instead of waiting to save enough for a down payment.

There are several viable options available for purchasing a home with zero down.

  1. Obtain one new loan at 100 percent loan-to-value (LTV). PMI is usually no longer required, however the insurance charges are now (2007) tax deductible.
  2. Receive an 80 percent first mortgage and a 20 second (piggy-back or 80/20) home loan. This program does not require the usual PMI, and all interest is tax deductible.
  3. Obtain a new first loan and have the seller carry back the second mortgage loan for the balance of the purchase price that is agreed upon.

Several zero down programs will allow you to borrow 3 to 7 percent of the purchase price to pay your closing costs on the new mortgage.

FYI-PMI is an additional monthly charge you pay if you have a lender that requires it and you make less than a 20 percent down payment. This mortgage insurance policy protects the new lender in the event of a payment default or foreclosure, and the mortgage is not paid off in full. The PMI paymenty ou'll make ranges from 0.32% for a fixed rate loan with a 15 percent down payment; up to 1.10% with zero down; and as high as 1.45% on a zero down variable interest rate mortgage.

Kevin O'Connor
Mortgage Consultant
www.koloans.com
800.550.5538

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