No and low down payment loans require little or no cash from the buyer at the loans closing.

While Private Mortgage Insurance is generally required on any loan with less that 20% equity in the home, some mortgage programs like “Lender Paid MI” allow you to lower costly mortgage insurance.

Low down payment programs like FHA, VA and USDA can be a good idea for first time home buyers or those who could better use the money for other purposes.

The average down payment for a house 20 years ago was 20 percent. Today, it’s common for people to put as little as four percent down on their new home. Simply put, a no down payment mortgage is a mortgage for which you don’t put any money down on the purchase of your house. In today’s market, finding a no down payment mortgage may be extremely difficult unless you are a veteran and eligible for the VA Program – which almost never requires a down payment, but low down payment mortgages, such as the FHA Program, are very popular.  The USDA Program is also popular and requires no down payment but is restricted to rural zoned areas.

No down payment mortgages for veterans and low down payment mortgage for non-veterans are now a safer bet for clients and lenders alike.

Low Down Payment Mortgage

A popular choice for homebuyers is the “low down payment mortgage.” The FHA loan program is a mortgage that only requires a 3.5% down payment.

Who Is a Good Candidate for a Low Money Down Mortgage Loan?

For some people, a low money down home loan may be the only way to buy a home. First-time home buyers may not have enough saved up for a 20 percent down payment, or might want to use the money they’ve saved for other uses like buying furniture or other necessities for their new home.

By not putting as much money toward a down payment, you can use it for other things such as paying off or consolidating debt. It makes good financial sense because mortgage interest is usually tax-deductible and rates are lower than most credit cards. You may also need that extra money to pay for your children’s education.

Avoid Paying High Private Mortgage Insurance with Lender Paid

There can be a disadvantage to a low down payment mortgage, which is paying private mortgage insurance, or PMI. Anyone who puts down less than 20 percent of the home’s value usually has to pay PMI, depending on the loan program they choose. But there are ways to lower this expense:

*While Private Mortgage Insurance is generally required on any loan with less that 20% equity in the home, some mortgage programs like Lender Paid MI allow you to lower costly mortgage insurance. By paying a portion of your PMI upfront, or in your interest rate, you can significantly lower your monthly PMI for as long as you decide to keep your loan. Just like how some people lower their mortgage rate with points, you can do the same with your PMI!

• Borrowers that meet certain criteria can eliminate PMI after they’ve reached a predetermined level of equity in their home. This amount varies depending on the type of loan, but it is commonly between 20 percent to 22 percent. Lenders are required by law to cancel PMI when the homeowner has reached 22 percent equity in their home if the loan was closed after July 29, 1999. However, once 20 percent equity is reached, the homeowner may make a request to their mortgage lender to cancel PMI. Otherwise, the homeowner may end up paying for PMI during the time it takes to reach 22 percent equity.

There are other ways to get a 20 percent down payment you may not have thought of. For instance, some loans allow for down payments to come from sources like monetary gifts from relatives or employers. Other ways of coming up with a down payment might include drawing from a trust fund or a retirement account, or using money you inherited. However, be aware that some types of those accounts may incur fees or penalties for making withdrawals.

Overview

You’ve heard about interest-only mortgages for years. But do you really understand what they are and who should consider them? Is an interest-only loan right for you?

Separate myths from facts and learn how the security of a fixed rate of an interest-only home loan might benefit you.

An interest-only loan is one that gives you the option of paying just the interest or the interest and as much principal as you want in any given month during an initial period of time after your closing.

At Academy Mortgage, our interest-only home loan programs are offered as interest-only loans for periods of either five or seven years.

For many, the most appealing feature of an interest-only loan is that you control your payment amount and your cash flow in any given month during the interest-only period, and your monthly mortgage payment will be lower than it would be with an interest plus principal payment. Your interest rate may or may not be lower than a traditional mortgage, depending on your specific situation, but you will have the option of flexible payments.

Who Is an Interest-Only Home Loan For?

There are a number of good reasons to consider an interest only loan. For instance, it might make good financial sense. On a traditional 30-year fixed, roughly 70% of the payment goes toward interest during the first six or seven years of the loan. If your interest rate is low, then you’ve borrowed money at a good rate.

Instead of paying down that low rate loan, you could take the extra money you’d have each month from making interest-only payments, and invest it in something that would bring you a higher rate of return. Depending on your loan amount, you could have access to thousands of dollars over the course of several years to invest or reduce high interest debt, including credit card debt.

An interest-only home loan may also be a good option for people who expect to be in their homes for less than ten years. The average homeowner stays in their home between five and seven years. As mentioned before, home mortgage payments are mostly interest for the first years of the loan. Many homeowners like the option of making interest-only payments and using the extra money as they please – save for college tuition, make home improvements, or buy a much-needed new car.

Common Misconceptions About Interest-Only Loans

A big misconception about interest-only mortgage refinancing is that if you’re not paying down your loan’s principal every month, you’re not building any home equity. That’s not necessarily true. Historically, homes in the U.S. appreciate an average of 3% each year. If you’re in an area of the country that is appreciating, you’ll still be building equity, even with an interest-only loan. If you’re unsure of your home’s value, try our home value calculator or give us a call to see if an interest-only loan is right for you.

You should also know that with any Academy home loan, there are never any prepayment penalties. You can refinance anytime.

Overview

FHA loans are great for first-time home buyers. Only a 3.5% down payment required. FHA is a perfect choice for those with lower credit or incomes.

The FHA Loan Program is the quick way to go FHA. We at The Canto Team makes the FHA loan process painless. It’s why we were the first online mortgage company to be FHA approved!

What exactly is an FHA loan?

Good question. An FHA loan isn’t really a loan; it’s a program that insures home loans. The FHA (Federal Housing Administration) doesn’t actually fund your home loan in any way. The FHA simply provides mortgage insurance to help consumers become homeowners. In other words, the FHA insures lenders from losses associated with homeowner default. This helps mortgage lenders prepare mortgages for people who might not otherwise qualify for a loan. That’s pretty much it. To keep things simple, we (and most other mortgage lenders) call any loans insured by the FHA, “FHA Loans.”

Should I get an FHA loan?

Do you want to buy a house with a small down payment? Are you a first-time home buyer? Do you have lower credit or even no credit? Are you concerned that you don’t make enough money to qualify for a home loan and cover all expenses? If any of these are true, an FHA loan may be a great solution for you. Even if you have good credit and a down payment, the increased options of FHA home loans make them attractive choices for your mortgage.

Buy a home with a very small down payment

A great point about an FHA loan is that you can buy a house with a tiny down payment – only 3.5%. That’s one of the lowest down payments for any mortgage loan offered in today’s economy.

Lower credit? Don’t worry!

With an FHA Loan, credit may not be an issue. Lower credit scores may be ok – our mortgage bankers look at each application on a case-by-case basis. It is also may be possible for people with no established credit to receive a loan with this program. That’s why an FHA Loan is an attractive loan to folks who think they probably can’t qualify for a mortgage. Don’t assume anything. Get in touch with us and we’ll do a check of your situation and get you into the best loan possible.

The first choice for first-time home buyers

An FHA loan is a great way for first-time home buyers to buy a home. The FHA permits borrowers to have a higher debt-to-income ratio than most insurers typically allow. In other words, you can get more home with an FHA loan than with a conventional loan. And with only a three percent down payment, an FHA loan is ideal for people without large savings accounts to afford getting a home. Stop throwing your money down the drain and into your landlord’s pocket. You deserve the benefits (lower taxes, equity, investment potential, piece of mind) that homeownership offers. Call us today at (888) 724-7402.

Think you make too much money to qualify for an FHA  loan? Think again!

There are no maximum income levels with FHA programs. Many home buyers mistakenly believe there are maximum income levels that prevent them from qualifying for a FHA loan. Not true. There are county-specific maximum home loan amounts however; borrowers should check with their mortgage banker to learn the specific requirements for the county in which they are financing the house.