There are a number of ways to finance a home with no down payment.  To help address the goal of home ownership to a greater population segment, the mortgage industry introduced several new products.  These programs help anyone looking to achieve the dream of homeownership a reality.

There are loans available that finance 100% of the purchase price in a fixed rate or variable rate product.   These loans require mortgage insurance premiums to compensate for the lack of down payment.

The 80/20 loan offers an 80% first mortgage along with a 20% piggy backed second mortgage.   The 80/20 eliminates the need for an out-of-pocket down payment and the additional mortgage insurance expense.

The 103% product allows those with excellent credit to finance 100% of the purchase price or appraised value (whichever is less) along with up to 3% of their closing costs.   Your closing costs are financed into your loan with this option. 

100% financing does not always mean higher rates but because there is a higher exposure of risk when granting these loans, generally higher credit scores are required. Those who have good credit are eligible for most of the same conventional loan programs and rates as those who have a down payment.  Your loan officer will help you to decide on the best product for you.

An adjustable rate mortgage (ARM) offers payment terms up to 40 years.  Rates are generally lower than fixed rate mortgages.  This allows you to qualify for a higher loan amount.  A borrower can also choose an ARM product based on the length of time they plan to occupy the house.   The rate on an ARM is limited as to how much it can increase or decrease at each adjustment period.   This means that your monthly payment can go up or down. Virtually all ARM products put a ceiling on the maximum interest rate increases per period and life of the loan.   It is a trade off; you get a lower rate with an ARM in exchange for assuming more risk. 

Balloon products provide a lower initial monthly payment.  Many balloon mortgages offer the option to convert to a new loan after the initial term.   One disadvantage is that the rates could be higher at the end of the initial fixed period.  Another is if you have a poor payment history during the balloon period, the lender does not have to renew your mortgage and you could be foreclosed upon if you can not find another lender to refinance your loan.

Only certain "loan related" fees are listed here.   Fees listed below show costs that are standard for most loans that we do.   These fees would be itemized with an '801-820' or '1301-1310' number on our Good Faith Estimate and HUD1/HUD1-A Settlement Statement.

There may be other fees that you will be expected to pay when obtaining a home loan with any lender.   These fees are based on the value of your home, whether or not the loan is for a home purchase, and local customs regarding the buyer's/seller's obligation to pay certain fees.   Since this will vary from person to person, we cannot list all fees including title search, title insurance, prepaid escrow funds for taxes and insurance, city and/or state stamps/assessments, or closing/settlement services by a title company.

Processing Fee	$300
Credit Report	11
Document Preparation - MRG Fee	50
Underwriting	80
Flood Certification - Life of Loan	19
Tax Service Fee (one time charge)	85
MERS Fee	5
Funding Fee	225
Total Fees:	$775

Rates, points, fees and third party expenses can not be guaranteed and are subject to change without notice.

A conventional loan has a fixed interest rate in which the principal and interest payment remains the same over the life of the loan.  Terms from 10-40 years are available.  The major advantage is that you are protected if interest rates go up, yet you have the flexibility to refinance without a prepayment penalty if the rates go down.   Shorter terms typically have a lower rate.

Debt consolidation loans allow the borrower to use the equity in their home to pay off existing debt which may lower a borrower's overall monthly payments.  Cash out refinancing also uses the borrower's equity in their home, but does not dictate what the loan proceeds are to be used for.  Your loan officer can help determine what your options are and which program is best for your current situation.

Home equity loans offer a fixed rate term loan while a line of credit allows you to borrow only what you need and pay monthly interest on that balance.  These loans are often done as second mortgages and are sometimes used to finance the down payment on a purchase.  In addition, consult your tax adviser to determine if your home equity's interest may be tax deductible.

If you have a seasonal income or will not be in your home for a long period of time, you may want to consider an interest only mortgage loan.     You are billed monthly for only the interest that has accrued on your principal balance since the previous payment.    You decide how much principal reduction, if any, you will make each month.  

As of January 1, 2006, all mortgages in excess of $417,000 are considered jumbo mortgages.   Generally, the rates are slightly higher than conventional mortgages.   Jumbo mortgages are available in both fixed rates, ARM's and interest only products.   Single family residential, condos and single family second homes can be financed with no prepayment penalty with full documentation, alternative documentation, limited documentation or no documentation financing methods.

The stated income program offers both fixed and variable rate loans and was designed especially for the self-employed or those in a profession that receives tips for income.  This program allows the borrower to qualify for a loan without providing proof of income - no paystubs, W2's, or tax returns.  All you need is a credit score and 12 month's verified rent or your existing mortgage payments made on time. These loans usually have slightly higher interest rates. They can be used to purchase a home with as little as 5% down payment or to refinance your existing mortgage loan.