Mortgages with no money down have performed worse than home loans where borrowers have some skin in the game, but proponents believe the lack of down payment wasn’t/isn’t the core issue.
So will the new breed of zero down mortgages perform better than their earlier counterparts?
Fannie Mae recently launched “Affordable Advantage,” a program that allows borrowers to purchase a home for as little as $1,000 down.
Throw in downpayment assistance (to cover closing costs), and you can get a mortgage for as little as 67 cents.
But in order to qualify, you must fully document your income, have a minimum credit score of 680, and actually live in the home.
Currently, they’re available in four states, including Idaho, Massachusetts, Minnesota and Wisconsin.
And of the 500 loans originated in Wisconsin since March, none are delinquent after six months (slow clap).
One of the other few remaining zero down loan programs comes from the United States Department of Agriculture (USDA).
Though it’s reserved primarily for low-income individuals and households, you can have income up to 115% of the median for the area in which you purchase the home (figure that one out).
The property has to be located in a rural area (or exurb) and be modest in size, cost, and design, and borrowers must have “reasonable credit histories.”
But it’s still an easy way around that pesky down payment.
Of course, those loans didn’t turn out so well…