How to Get a Zero Down Mortgage

Producing the cash for a down payment is difficult for some homebuyers.

When purchasing a home, a big concern for the borrower is how to produce the cash for the down payment. Although it is more difficult than in previous years, getting a zero-down mortgage is possible with a high credit score, steady income and steady work history. Lenders who offer zero-down-payment mortgages generally require private mortgage insurance (PMI) since there is an added risk when financing the full amount of the loan.

Things You'll Need

• Credit report

Instructions

1. Print and review a copy of your credit report from annualcreditreport.com. Visit the site and choose your state by highlighting it in the drop--down menu. Enter your personal information and choose one of the three reporting agencies: Equifax, TansUnion or Experian.

2. Make sure there are no discrepancies or errors on your credit report before attempting to secure a zero-down mortgage. If you find an error, contact the agency that reported it and file a claim to correct your report. Having a high credit score increases your chances of receiving a zero-down mortgage.

3. Visit a local mortgage broker. Request a loan that provides a zero down payment. These are generally loans backed by the Veterans Administration (VA), Rural Development or Federal Housing Administration (FHA). A mortgage lender has access to several types of loans and knows which zero-down mortgage you qualify for.

4. Contact a local bank. If you have a high credit score and strong employment history, it can offer the benefit of a zero-down mortgage. Local, privately owned banks process mortgages in-house, giving them more leeway when providing a mortgage.

5. Compose a real estate purchase contract requesting the seller to pay your down payment and closing costs. If the lender is aware of the seller paying for your costs and is in agreement, you are allowed to “roll-in” the funds, lowering your out-of-pocket costs.

6. Complete the application required by the lender. Also, provide the required loan documents, including pay stubs, tax documents and employment verification, as requested. The underwriter reviews your application packet to determine if you qualify for a zero-down mortgage.

References

• Annualcreditreport: Free Credit Report
• Bankrate: 4 Mortgages that Require Little Money Down
• Bankrate: The Basics of Private Mortgage Insurance