Author: Chris Bowser, Home Loan Specialist
Phone: 615-370-8634 ext. 187
Email: Chris.Bowser@ChurchillMortgage.com

We receive a lot of inquiries regarding the opportunities for 100% Financing/No Down Payment home loans. There have been numerous Guideline Changes from Fannie Mae, Freddie Mac and FHA over the past 18 months or so. They have eliminated the Zero Down Payment options which means, there are only 2 options now available.

The first is a VA (Veteran’s Administration) Loan. To qualify, you either have to currently be enlisted in the Armed Services or previously been enlisted in the Armed Services.  The website for additional information is http://www.homeloans.va.gov/ which will answer the questions you probably have, including eligibility. The number one facet of value is that there is not any PMI (Private Mortgage Insurance) with the loan. The only downside would be the “Funding Fee” that is charged in obtaining the loan. Depending on how many times you have used your privilege the rate can be from 1.5% to 3.3% of the loan amount which is simply tacked on to the loan amount.

The second loan that qualifies for 100% Financing is the USDA Rural Property Development Loan.  In order to qualify for this loan, the property has to be located in a USDA approved location and furthermore there are income limits. To see if you qualify for this type of loan, please visit http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1 and follow the links. Like the VA Loan, PMI is not required monthly. However, there is a Funding Fee similar to the VA Loan which is 2% of the loan amount.

Finally, the good news is that FHA only requires 3.5% of the Purchase Price for the down payment and Fannie/Freddie only requires 5% down. In all cases, credit worthiness needs to be acceptable along with proper income verification. The Loan to Value is determined by the Purchase Price and not the Appraised Value of the property. Please also keep in mind that with any Mortgage/Home Purchase Transaction that there will be Settlement Charges (Closing Costs) in addition to the money down. You can always have the Seller pay for these items which reduces the amount due from you and helps you get into the home with very little down.

Let us know if you have any further questions about this program or others here at Churchill Mortgage.