Profile picture for evandagna

Is is possible to get a mortgage with $0 down?

We have excellent credit.  We would like to purchase a bigger home since we've outgrown our townhouse and interest rates are really favorable.  Our townhouse is worth less than what we owe so we can't sell or refinance.  We have an ARM that has adjusted to significantly less than what we currently pay so we can rent it out and still have money left to pay down the mortagage.  We intend to sell once we can break even or make money.  Will anyone lend to us with $0 down?  We could put make a small down payment, but it wouldn't be significant on a $550,000 home. 
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May 31 2010 - Annapolis
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Answers (5)

Profile picture for Pasadenan
If they are paying 3.5% on their ARM presently; and that barely allows renting it out to cover the mortgage payment, why would they want to Refinance it at 5.125% and put in an additional $10k for loan initiation and closing costs?

If they put 20% down on a new purchase with 760+ FICO, and DTI ratio of under 40% including the new purchase and existing... they likely can get 4.625% fixed 30 yr interest without having to pay mortgage insurance; but otherwise; probably over 6%; and add to that the mortgage insurance.

So, just another con-artist, pitch-man, NAR member trying to make a commission.

If it wasn't for those NAR members, there wouldn't have been a bubble in the first place; but we all know what that unfounded NAR propaganda did.
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May 31 2010
You may be able to refinance even if you're under water on your current home...there are programs out there intended to help people in your situation. Do you have a 2nd mortgage on your current home? If so, you may be able to get them to subordinate (remain the 2nd lienholder) and do an FHA 1st loan.

Assuming you're planning on renting out your current home...I don't believe most lenders will allow you to use the incoming rent as income immediately. So, just a heads up that you'd likely have to qualify for both loans on your current income. If you can - then a VA (Veteran's) loan is probably your best option for 100% financing (if you're a veteran). And don't pay attention to other respondents that these rates aren't favorable - they are very good.

Another option: In Washington State (where I am) they have a state bond program to do a 96.5% FHA first loan and a Gov't sponsored 3.5% 2nd loan...for a total of 100% financing. They may have something similar in your area (I know they do this in several states). Otherwise - FHA will allow the 3.5% down payment to be gifted to you from a relative...I've done several purchases where people utilized that option. With FHA, you'll be paying mortgage insurance, but rates are still very good (5% last I checked).
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May 31 2010
Profile picture for Pasadenan
Interest rates plus mortgage insurance is not "really favorable" if you have nothing to put down.

So, if you think you can afford an additional $3.6k out of pocket costs per month; why weren't you putting that additional $3.6k per month aside for the down payment over the past 2.5 years?  If you did that, you would have the 20% down payment and would qualify for the "favorable" rates, lowering your costs about $1.3k per month.

Besides, if you buy the $550k home with nothing down now, you will be about 10% underwater by next year on that loan too.

Didn't you learn anything from your last bubble purchase?

Are you planning on filing bankruptcy and walking away from both homes?
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May 31 2010
If you are Veterans and your current property is a conventional mortgage and the property that you are going to purchase would be a VA mortgage and that you would be upgrading to an owner occupied property. You would need to be able to afford to make both payments on your current town home and your proposed mortgage and have 6 months future reserves for both mortgages. Also, depending on the area that you live in you would need to check with you local broker to see what the "VA loan limits" are in your area and go from there.

If your not a VA. You could try FHA if your current mortgage on your town home is a Conventional mortgage, the same rules would apply as VA, except that FHA requires a 3.5% down payment of what the sales price is. The funds for the down payment can be gifted to you by family member.
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May 31 2010
Profile picture for wetdawgs
Finding a mortgage with $0 down is almost impossible these days, and finding a mortgage when your current property has negative equity is also difficult.    Therefore, work hard to build up a down payment rapidly and keep your fingers crossed that interest rates will remain favorable.

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May 31 2010
 
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