In these days of escalating rents in which rent payments can be more than a mortgage payment, many people are unable to save any money for a down payment. As a result, many think that home ownership is not possible without a down payment. The reality is that there are several opportunities to become a homeowner with zero and other low down payment loan programs. Here are a few of the better deals out there:
USDA loans: Zero down payment loans are available to buyers with decent credit and a steady income that does not exceed certain guidelines for the program. These loans are often called rural loans, but many areas surprisingly qualify under the program. There is no personal mortgage insurance on these, but a 2 percent fee which can be rolled into the loan and an annual fee of .5 percent of the loan balance.
First Time Home Buyer Programs: There are various programs available for first time home buyers through certain banks and credit unions along with some government programs. Some of these programs include down payment assistance grants.
Credit Union Programs: Some credit unions offer low or no down payment loans, such as Navy Federal Credit Union, which is for members of the military or their family members, and some civilian employees of the Department of Defense. If you meet the credit criteria, this is a better deal than VA loans because the funding fee is lower at 1.75 percent. Other credit unions also offer zero down financing type loan programs.
FHA Loans: These loans do not require stellar credit, the down payment amount is 3.5 percent and all of the down payment can be a gift from a relative or approved nonprofit. Some lenders allow a credit score as low as 580. There is 1.75 percent upfront fee and .85 per cent personal mortgage insurance per year.
VA Home Loans: These loans allow veterans and their surviving spouse to purchase a home with no money down and low closing costs. Interest rates are also generally lower than traditional mortgages. These loans also have a funding fee of 2.15-3.3 percent, which can be rolled into the loan.
So, there is still some hope with programs like these. The big thing to watch out for is the personal mortgage insurance (PMI) amount. The reason you see PMI requirements is because the loan balance exceeds 80 percent of the value of the property. Once the property value increases so that the loan balance is 80 percent or less of the home's value, it's a good time to consider refinancing the mortgage and getting rid of the mortgage insurance.
LOW
1529 S.E., Bear Creek, Bend, OR 97702
3 beds, 2 baths, 1,504 square feet, .39 acre lot
Built in 1973
$265,000
Listed by Fred Real Estate Group
MID
20370 Murphy Rd., Bend, OR 97702
3 beds, 2.5 baths, 1,930 square feet, .14 acre lot
Built in 2005
$389,900
Listed by Century 21 Lifestyles Bend
HIGH
3137 N.W. Shevlin Meadow Drive, Bend, OR 97703
4 beds, 2.5 baths, 3,451 square feet, .39 acre lot
Built in 2012
$897,000
Listed by Coldwell Banker Morris Real Estate
Photos and listing info from Central Oregon Multiple Listing Service
