Answer:
Typically, lenders require a down payment of 20 percent of the home’s purchase price. However, some special mortgage programs allow you to purchase a home with no down payment, such as Veterans Administration (VA) mortgages (if you are a qualified veteran) and no-down-payment or 100 percent financing mortgage programs. VA mortgage terms are generally favorable when compared with other types of mortgages. However, some variations in terms may exist from lender to lender. As for no-down-payment or 100 percent financing mortgage programs, you will generally pay higher interest rates and closing costs on these loans, and there may be additional qualification requirements.
Besides special mortgage programs, you may be able to qualify for a conventional mortgage with no money down if you purchase private mortgage insurance (PMI). Typically, monthly PMI premiums are $45 to $65 per $100,000 borrowed. The cost of PMI depends on several factors, such as the amount of your down payment, your type of mortgage, and whether you pay premiums on a monthly basis or in a lump sum at closing. PMI premiums can significantly increase your monthly housing cost. Without PMI, however, you may be unable to qualify for a mortgage if you have no down payment.
IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any matter addressed herein.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018
