As real estate prices climb ever higher, many people looking to buy a home are having trouble coming up with the money needed for a down payment to purchase their home. Fortunately, there are many things that can help you secure a mortgage that requires a small down payment — or none at all.Many lenders and banks offer borrowers something called a 100% financing program. If you see “no money down” being advertised, this program is most likely what you are getting into. The biggest problem to this kind of arrangement (other than the high monthly mortgage payments) is that you must also buy private mortgage insurance.PMI, or private mortgage insurance, can cost an extra $50 to $100 per month for every $100,000 borrowed. So as you can obviously see, this can add up pretty quickly. The point of PMI is to offer protection to the lender, not the borrower. The only positive thing you will get from PMI is that you will qualify for loans that you wouldn’t be able to qualify for otherwise.These programs that offer 100% financing will also have higher closing costs and rates. Since the lender will have more risk you will have to pay more. When you have a no money down mortgage, there will be even more qualification requirements. Only people that have excellent credit ratings can qualify for no money down home loans.A 100% financing program is no the only option available to home buyers though. Mortgage programs with similar features are offered by the Veterans Administration. If you are a veteran that qualifies, the VA may offer you a low or no money down financing option. VA loans have no limit on the borrowing amount and you can get more than one VA loan if you so choose.If you can’t meet the requirements for these options, you could also try a financing option that is more creative. When the real estate market is in a recession, you will be able to find some good deals like owner financing arrangements and rent to own. With a rent to own situation you will have higher payments because a certain amount goes into a down payment savings account. Sometimes the seller may even hold the mortgage outright.Seller financing and rent to own options can help everyone involved. The seller gets to earn a profit while you get to buy a house even though you might not qualify for a mortgage from the bank. Make sure that you consult a lawyer in order to construct a fair and binding agreement for both parties. Even if you have little to no money for a down payment, you still have options.
