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Requirements for a No Money Down Mortgage

by Laura Agadoni

In the years leading up to the housing bubble bursting in 2008, subprime lending made up a big chunk of the mortgage market. Many buyers gained approval for mortgages without putting any money down; though 20 percent has traditionally been the standard amount to put down to get a conventional mortgage. In the post-2008 climate, lenders have been more reluctant to approve mortgages with no money down, but those mortgages are still available to those who qualify.

Being Affluent

Banks sometimes offer no-money down loans to wealthy clients, according to Market Watch. Instead of a down payment, banks might accept a portion of the applicant’s investment portfolio in addition to the house for collateral. This option is attractive to affluent borrowers because they can leave their investments alone to earn as much return as possible instead of pulling money out to use for a down payment. Usually, to be approved for this sort of mortgage deal, you would need to have your investment account at the same institution from which you are getting the mortgage.

Being a Veteran

Veterans apply for mortgage loans at the standard places: banks or mortgage companies. But the Department of Veterans Affairs guarantees part of the loans to service members, veterans and surviving spouses. VA makes it possible for some lenders to grant mortgages without requiring down payments or private mortgage insurance -- insurance premiums homeowners must pay unless they put down 20 percent of the home’s price or until they pay 20 percent of the price of the home. The small catches are that you must have good credit, a sufficient income and a Certificate of Eligibility, which you can get by applying online from the Department of Veterans Affairs.

Belonging to Navy Federal Credit Union

More than four million people belong to Navy Federal Credit Union. You might be eligible to join, too. The eligibility requirements are that you work for the Department of Defense, the Coast Guard, the Army or Air National Guard, or are a DOD civilian employee. Family members are also eligible. NFCU offers no money down mortgages to first-time homebuyers. The mortgages have fixed rates and don’t require private mortgage insurance. NFCU also offers VA mortgages with 100 percent financing.

Being Low- to Moderate-Income Level

The U.S. Department of Agriculture’s Rural Development Department offers no-money-down mortgage loans to low- to moderate-income homebuyers who will buy in rural areas. Your income determines the type of house you can afford and will be allowed to purchase under the program. The home needs to be in an approved area, but you get 100 percent financing on a fixed 30-year mortgage.

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