Are Zero Down Payment Mortgages Too Good to Be True?

If not for low down payment mortgages, most people would never be able to afford to buy a house or condominium unit. Conventional mortgage loans require you to place a down payment of 20 percent of the purchase price of the house; given the prices of real estate today, it is almost impossible to gather that much money unless you are using the proceeds of the sale of another house. Even the 3.5 to 5 percent down payment that you typically pay when you take out an FHA, VA, or USDA mortgage is a challenge. If you have a steady income but, like most people, you live paycheck to paycheck, it is difficult to build up enough savings for a down payment. If only there were mortgage loans that did not require a down payment. If that happened, the money you now spend on rent could now go to gradually building home equity. Zero down payment mortgages exist, but it is not easy to qualify for them, and if you do, you should be careful what you wish for. If you have a zero down payment mortgage and are in danger of falling behind on the payments, contact a Philadelphia mortgage foreclosure lawyer.

Yes, Zero Down Payment Mortgages Are Real

The VA and USDA home mortgage lending programs offer a zero down payment home mortgage loan option. The first step toward getting a zero down payment mortgage is to meet the other eligibility requirements for a VA or USDA mortgage. You can only qualify for a VA mortgage if you have served in the U.S. Armed Forces. Likewise, you can only get a USDA mortgage if you are buying a house in a rural area. Most USDA and VA mortgage loans require a down payment equal to a small percentage of the price of the property you are buying. If your credit score is at least 620 and you meet the other USDA and VA eligibility requirements, you can get a USDA or VA mortgage with zero down payment.

Zero Down Payment Mortgages Are Risky

It is a relief to borrow a zero down payment mortgage if you qualify for one. You won’t have the “house poor” problem where you once had a large savings account balance, but then you spent it all on the down payment and closing costs, so you feel broke even though you have at least a modest amount of home equity. With a zero down payment mortgage, you start with no home equity, and it builds slowly, since most of each monthly payment goes to interest. Therefore, even a small reduction in the value of your house can mean that you have negative equity.

Contact CONSUMERLAWPA.com About Mortgage Loan Trouble

A Philadelphia consumer law attorney can help you if you have a zero down payment mortgage, and you have negative equity or have fallen behind on the payments.  Contact CONSUMERLAWPA.com to set up a free, confidential consultation.

Source:

experian.com/blogs/ask-experian/what-is-zero-down-mortgage/#:~:text=A%20no%2Ddown%2Dpayment%20mortgage%20is%20a%20type%20of%20home,financing%20on%20your%20home%20purchase.