how to qualify for zero down loan for house?

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I am curious on how to qualify for a zero down payment loan. What do lenders look at/need in order to approve a person for this kind of loan. Im fairly young (23), live in westchester, NY and have been renting for the last 6 years. I do not want to put any oney down as I plan to sell the house within 5-7 years. I have a mid-700’s FICO and very little debt…maybe about 6k total, which i plan to pay off by this summer. I would like to know what to do in order to qualify for a zero down loan…the price range of mortgage im looking at is no more htan 400k. Any advice?

3 Comments
  1. Reply
    Josi
    April 30, 2011 at 12:31 am

    Everything sounds good about you.
    They’ll also look at how long you’ve been at your current job. The “age” of your credit history will work against you, but it’s not your fault that you’re only 23! Your FICO is good. Also check your debt/available credi ratio. Meaning, how much credit is open to you vs. how much you’re in debt. If you have 2 credit cards, one with a $ 4,000 limit and one with a $ 3,000 limit, and you have $ 6,000 in c.card debt, it’s a bad thing. But if you have 4 c.cards w/ a total $ 45,000 limit, it’s not as bad.
    Also, $ 400,000 is a large amount.
    They may ask that you put something down. If even 2%. Be prepared for that. They just want to know that you’re financially invested and motivated to make this payment.
    Check out SuzeOrman’s webesite to help you understand more about what lendors are looking for.
    Best of luck to you!

  2. Reply
    AZWM-dot-com
    April 30, 2011 at 1:19 am

    With a credit score in the mid-700’s, just about every bank has a zero down program. I do not think they are licensed to do business in N.Y.- they are a southwest-based company- but I just bought a house with zero down from National Wholesale Mortgage at http://www.azwm.com

    You can go to official FHA website and find out the maximum loan amount for your area – https://entp.hud.gov/idapp/html/hicostlook.cfm

    I think homes in New York are fairly expensive, so maybe you can get an FHA loan. These loans generally need 3% down, but the 3% can come from anywhere. This means that the seller can actually pay your down payment for you. This is definitely your best option if the home you want falls under the price range you need.

    Bank of America offers a 103% loan. This means that one loan covers 100% of the cost of the house, plus an extra 3% for closing costs. The only downside of this loan is that the mortgage insurance is relatively high. Mortgage insurance is something that the banks force you to buy until your house is paid down 20% (or appreciates 20%). This could take several years (at 7% equity increase per year) or one year in a fast market (like we had last year).

    Finally, many lenders will try to sell you an “80/20.” This is a sucker’s loan. You get one mortgage for 80% of the value and a second mortgage for the remaining 20%. Brokers make a lot of money on these loans, so they will try to “sell” you by telling you that you don’t have to pay mortgage insurance. You will save $ 150 per month on mortgage insurance!

    That is only half-true. The second mortgage is either fixed at a high rate, which you are stuck with or, even more likely, you will get a home equity line of credit, which changes every month. Bottom line: The same bank offers a loan with mortgage insurance and also the 80/20 without mortgage insurance. Do you really believe that one is better than the other? The bank is going to make their money either way. The problem with the 80/20 is that you are stuck with your high-rate second mortgage forever and with mortgage insurance option (one loan) you can drop it in just a few years.

    Don’t be suckered by the 80/20 sales technique.

    So for first time homebuyers, the best options are (in order):

    1. FHA loan with seller paying down payment
    2. Bank of America’s 103% loan (must have good credit)
    3. 80/20

  3. Reply
    mortgage help
    April 30, 2011 at 1:30 am

    Have an experienced Loan Officer review your complete application and your 3 score credit report. From there, he/she will be able to tell you exactly what you qualify for…and if nothing now… what you need to do to qualify in the near future. Don’t wait to get pre approved once you find the house. Get pre-approved first.

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