A lot of people are under the impression that the days of a $0 Down Loan are over. Well, I’m here to tell you they are not!
$0 Down Loans can be a great option for many people. What you need to do is consider the Pros and Cons for each type of loan or program and determine if it makes sense for you and your specific situation. If you would like to get additional information or just discuss your options,
contact me and I can put you in touch with a reputable loan officer who can explain these loans/programs in greater detail.
Let’s break down some of those Pros and Cons of a few different types of $0 Down Loans and Programs!
USDA Loans
Pros:
· $0 Down payment
· No monthly Mortgage Insurance (MI) – however this is changing October 1, 2011
· Credit Scores down to 620
· Ratios as high as 54% (this is on a case by case basis)
· Easy to qualify for
· DO NOT have to be a first time buyer!!
Cons:
· There is an upfront funding fee (currently at 3.6%)
· Geographically restrictive (wondering if a home is in a USDA location? Call or email and I can look it up!)
· There are income limits – this can be tricky because everyone who lives at the property (parents, adult children, etc.), their income is included in this
VA Loans – Returning Service Men and Women from Overseas
Pros:
· $0 Down payment
· No monthly MI
· Credit Scores down to 620
· Ratios as high as 56% (this is on a case by case basis)
· Easy to qualify for
· DO NOT have to be a first time buyer
· NOT geographically restrictive
· NO income limits
· Max loan amount $417K
Cons:
· There is an upfront funding fee
· Must be VA Eligible
MCC – Mortgage Credit Certificate (Bond Program)
Pros:
· You can use this with FHA, Conventional, and VA loans
· Can help in qualifying for a loan
· Reduces Federal Income Tax liability yearly based on amount paid in interest on mortgage loan
Cons:
· There are income limits
· Cannot be used in conjunction with other Bond programs (ex. the Bond 77 program)
· Does not reduce mortgage payment
· You may be subject to a Recapture tax
NOTE: this is not a tax credit
Bond 77
Pros:
· There are no geographic restrictions
· DO NOT have to be a first time buyer (targeted areas only, check in with me to see if an area qualifies)
· Provides down payment assistance
· You can use this program with FHA, Conventional, VA, and USDA loans
Cons:
· There are sales price limits
· There are income limits – this can be tricky because everyone who lives at the property (parents, adult children, etc.), their income is included in this
· You may be subject to a Recapture tax
· You must complete a pre-purchase homebuyer education course
