Zero Down
A zero down loan is good when you don't have enough cash to pay your closing costs and make a down payment on the purchase of your home. It is also used to avoid paying Private Mortgage Insurance (PMI) costs.
Zero down programs allow you to buy your home now, instead of waiting to save enough for a down payment.
There are several options available for buying a home with zero down.
- HUD HOME - Get one new loan at 100 percent loan-to-value (LTV). PMI is usually required, and the insurance charges are tax deductible.
- Rural Development - Get one new loan at 102 percent loan-to-value(LTV). PMI is NOT required.
Some zero down programs allow you to borrow 3 to 7 percent of the purchase price to pay your closing costs. Ask your loan officer if you qualify for any of these programs.
PMI is an additional charge you pay if you make less than a 20 percent down payment. This insurance policy protects the lender in the event of a payment default or foreclosure, and the loan is not paid off in full. The PMI payment ranges from 0.19 percent for a fixed rate loan with a 15 percent down payment; up to 1.09 percent with zero down; and as high as 1.34 percent on a zero down variable rate.
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