No Money Down Loan
No money down loan products are typically done as an 80/20 and are also described as combination financing or piggyback loans and offer a convenient way to provide creative financing in a purchase, refinance, home improvement, or debt consolidation transaction. In a purchase transaction, a second trust is frequently used in combination with a first trust to avoid paying Private Mortgage Insurance or PMI. The first trust is always set at 80% of your purchase price which eliminates the need for PMI. We add a second trust of 20% of the purchase price or value. There are actually two versions of this program offered by several lenders. The first will require you to have 3% cash in the transaction (covering your closing costs) and the second requires no cash at all. I have had many clients close there transaction with no cash by having the seller pay all of their closing costs. Several programs will now allow combined loan amounts up to $500,000 and again, NO Mortgage Insurance! Please email me with any questions about a no money down loan.
Several advantages to consumers using a no money down loan include:
However, there are some potential problems with the strategy.
Second Trust RatiosA second loan or second trust is a loan secured by your property which takes second position to the first mortgage. A second trust carries a fixed interest rate for the life of the loan and amortization periods range from 5 to 20 years with a great new product amortized over 30 years with a balloon due in 15 years. The longer amortization period lowers your monthly payment significantly. Generally, your total debt ratio should not exceed 45% of your monthly pretax income.
Several of our lenders are now offering interest only options which can often lower your payment or allow you to purchase more house. I have a rather extensive section detailing these new Interest only loan options.
Learn more about No Money Down Loan Closing Costs
I have included a page on how to calculate your no money down loan qualification ratios.
We offer you the ability to qualify and close into several unique programs which accommodate borrowers with non traditional income or asset situations. Please visit my No Docs page for additional information on a Stated Income Second Trust.
Many of my clients are converting from fully amortizing payments to an interest only approach with a significantly lower monthly payment. I have some extensive information available. Read more to see if this powerful tool could work for you.
As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.
Prequalify for your No Money Down Loan.