Zero-Down Loan When Purchasing A Home

The thought of purchasing a home with no money down is alluring without a doubt. However, if you’re looking to buy you shouldn’t make a decision right away just because you think the lender’s advertisement translates into something that’s best for your specific financial situation. Today’s piece will look into zero-down loans and what they are all about.

Mostly known as hundred-percent financing, zero-down loans don’t require down payments. For an individual with little to no savings, you would tout these loans as a windfall if you only dreamt of owning a house one day.

No real estate professional can forget the 2003 to 2006 property boom. During this period, aspiring homeowners got assists from the zero-down mortgages and joined the ever-growing club of homeownership. No one was left behind. Not even those with bad credit, unstable unemployment, and no cash.  It’s safe to assume that it was during this time that the newest craze in town was homeownership. There are cases where some people obtained ‘no-doc’ loans, and that meant they didn’t have to disclose their debts or income. Christmas came early that year, and Santa gifted almost everyone with a fair share in the spiking property values.

Unfortunately, life is all about ups and downs. As time went by the home values plummeted, and many zero-down borrowers gradually found themselves underwater. That means these group of individuals quickly realized they owed more than what their homes were worth. Selling the property to pay off the mortgage completely wasn’t an option anymore. So if by any chance lost their jobs, keeping up with the increased payments would have been a real hassle. In case you didn’t know, zero-down loans usually have very high-interest rates and some ‘funding fees’ wrapped into them. That’s how lenders cover the risk of underwriting them.

Immediately the real estate market crashes all the products gotten with hundred-percent financing loans usually disappear completely. Those spared are U.S Agricultural Department Zero loans and those of the Veterans affairs. With time the underwriting requirements became stricter and poor buyers found it difficult to buy a house. Those with short sales or foreclosures on their credit reports got cut off immediately as well.

So many hearts were crashed. People kept on making contact with real estate agents around the state inquiring whether it would be possible to own property again. It was so disheartening to see someone lose a home after the crash.

But all that happened eight years ago. Today, you can own a house once again. Experts have said the real estate market has undergone a 360-degree cycle and it’s ready for anyone who’s willing to try again. We’ve seen the underwriting requirements become friendlier over time so qualifying for a loan is easier. And recently, more lenders have gone all out and advertised creative loan programs. An excellent example is the Zero Down.


Before signing up for this program, get a better understanding of your financial position from an advisor. Ask yourself whether you’ll be in a place to pay off the mortgage once the housing market crumbles. Remember, zero-down loans can sometimes turn into a curse.

Get in touch with Lynk Capital, Inc. to learn more.

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