Upon purchasing a home, a mortgage is needed. There are different kinds of mortgages to choose from and usually these loans need a down payment. Nowadays, we have this loan called a zero-down mortgage. In the past, it was quite tough to get a zero-down mortgage, unless you were a veteran and you can obtain one from the Veteran’s Association. This program has been around for years and is becoming popular. For borrowers with low, moderate incomes, this type of loan is ideal – this is low cost, zero down payments. How convenient is that?
Unlike any other loan, borrowers are charged a one-time fee of 3.5% of the amount borrowed. This will be utilized to fund the program. This fee is placed in the mortgage itself so that borrowers can still have their mortgage without having to give a down payment.
Of course, in order to qualify it follows that borrowers need to have good credit and they need to meet income limits. 115% of the local median income is allowed which is adjusted for household size. For those people whose income is below 80% of the local median, they can qualify for other subsidies. It is ideal that you ask your lender if you are within the income bracket and ask for additional information regarding the mortgage.
This type of program is actually offered for individuals who are living in a rural area. This can include a place with ten thousand residents or small cities with a population of twenty five thousand or less. Homes which are constructed or bought in the area should be small in size, design and cost. You can get an average loan of $112,000.
Applying for this type of loan is incredibly beneficial if you have a meager income and you want to have your own home. Set aside a budget from your monthly income so that you can pay the mortgage payments. Also, prior to applying, make sure that you pay your loans on time and that you get a copy of your credit report so that you will be aware if you need to improve on your credit score or not.