100% Financing Or No Down Payment
Non-prime lenders such as Physician Mortgage Loans, now offer financing packages with zero down. Interest rates are higher on these types of loans, but they make purchasing a house easier. And unlike a conventional loan, there is no private mortgage insurance required. There are several types of zero-down mortgage packages, each with their own requirements.
Physician Home Loans
Although many doctors will have higher than average incomes, unfortunately they have much higher student loan debts that can range from $500,000 to over $1 Million. Physician mortgage loans have been in great demand due to the 14,000 plus medical students graduating each year.
Types Of Zero-Down Loans
100% financing, as it names implies, offers complete financing of your property. The other option, 80/20, finances your mortgage with two loans. Both loans may be carried by your lender, but sometimes the seller or a second lender is required to carry the 20% mortgage.
100% financing is easier to deal with, but not all lenders will offer this type of home loan. 80/20 financing is more common, but takes some negotiation if the seller is involved.
Qualifications For Zero-Down
Each lender has their own criteria for determining who will qualify for a zero-down loan. Most sub-prime lenders require any bankruptcies or foreclosures to have been at least twelve months ago. A conventional loan requires these to be discharged two to four years ago. However, there are some other alternative programs offered at the American Mortgage Association.
While a credit score of 600 or higher is best, large cash reserves can also qualify you. Six to twelve month’s worth of cash reserves in the form of savings, money market, or other liquid assets are considered ideal.
If you choose 80/20 financing with the seller carrying the second mortgage, you can qualify with sub-prime lenders with a score of 500.
Zero-Down Sub-prime Lenders
You can find zero-down non-prime mortgages with both conventional and niche sub-prime lenders. Make sure that you request quotes from as many mortgage lenders has possible to be sure you find the lowest rate and best terms.
You will also want to decide what type of mortgage you want. An ARM is easier to qualify for and has lower rates. A fixed rate mortgage offers the security of a constant interest rate over the life of your loan.
Typically an ARM will be a better deal if you plan to refinance within a couple of years. After you have improved your credit history, you can refinance for a conventional mortgage with low interest rates.