How to Compare No Down Payment Mortgages

Step-by-Step Guide

1. 1

   Step 1: Determine if you qualify for a federally-backed mortgage.

   The Veteran's Administration (VA) and United States Department of Agriculture (USDA) make no down payment mortgages.
   
   Qualify for a VA loan if you are a qualified veteran purchasing a primary residence.
   
   Qualify for a USDA loan if you live in a rural area and you are purchasing a primary residence.
2. 2

   Step 2: Obtain quotes from several different lenders.

   Talk to lenders at banks, credit unions and other financial institutions about your need for a no down payment mortgage, and ask what they can offer you. , When comparing loans, you will want to work with a lender who answers your questions and is quick to provide you with necessary information. , You want to choose a mortgage with a low interest rate.
   
   Compare fixed and adjustable rates.
   
   A fixed rate mortgage will stay the same for the entire term of the loan.
   
   An adjustable rate will change periodically.
   
   Ask lenders for an Annual Percentage Rate (APR).
   
   This rate combines the interest rate with other charges and fees that you must pay, giving you a yearly rate of interest. , Most mortgages are 30-year loans, especially if no money is put down.
   
   A 15-year loan will mean a much bigger monthly mortgage payment if you do not make a down payment. , Points are fees that you pay up front to the lender to keep your interest rate lower.
   
   If you are not making a down payment, you may have cash available to pay for points. , The cost of the mortgage will include different fees, depending on the lender.
   
   Add those up to get the total cost of the mortgage.
   
   Include loan origination fees, application fees and appraisal fees.
   
   Compare mortgage offers to find the one with less or lower fees. , When a down payment is not made, most lenders require private mortgage insurance (PMI).
   
   This insurance will cover the lender if you cannot pay your mortgage.
   
   Ask lenders what the total cost of your PMI will be.
   
   Ask lenders how much your monthly payment will increase when PMI is added. , Lenders will be able to estimate how much you will have to pay at closing.
   
   Compare the totals. , Let each lender you talk to know that they are competing for your business, and you have found no down payment loans elsewhere.
3. 3

   Step 3: Consider the lenders offering you a mortgage.

4. 4

   Step 4: Look at the interest rates.

5. 5

   Step 5: Consider the term of the loan.

6. 6

   Step 6: Calculate points.

7. 7

   Step 7: Look for other fees as you compare mortgages.

8. 8

   Step 8: Compare private mortgage insurance requirements.

9. 9

   Step 9: Compare closing cost estimates.

10. 10

    Step 10: Negotiate with lenders.

Detailed Guide

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