The real estate market is currently a buyer’s market and because of this there are many people looking to purchase a home with no money down home loans. Unfortunately, many people do not understand completely what a no money down home loan is. No money down home loans are provided by a mortgage company that does not require a down payment. A no money down home loan is an option as opposed to a home loan or mortgage that requires a percentage of the purchase price as a down payment. For example it is quite common for mortgage companies to require 3%, 5% or even 10% down payment of the purchase price of a home. If you were to purchase a home for $100,000 oftentimes the mortgage company will require between $3000 and $10,000 down. This means the loan amount would actually be somewhere between $97,000 and $90,000. No money down home loans are especially sought after in today’s market because during a recession it is very difficult to find extra funds for a down payment on a house. Because no money down home loans are in such high demand they’re somewhat difficult to come by.

No money down home loans are most beneficial for the first time home buyer. The difference between a first time home buyer and someone selling a current home to buy another home is that the first time home buyer will not have any money from the sale of a home to put toward the purchase of a new home. Sometimes a home buyer who is currently selling a home will try to obtain no money down home loans as well so they can put the money made from the sale of their home toward something else. Oftentimes people want to utilize that money for home improvements or maybe to pay off tax liens or other monies owed.

There are many pros and cons to home loans with no money down. One of the pros to obtaining no money down home loans is that you could afford to buy a home sooner than if you had to save for a down payment. One of the major cons to no money down home loans is that you will take longer to build equity in the home. What this means is, if you are ready to sell or refinance your home within five years but you didn’t put any money down during the purchase of your home, you will not have built much, if any, equity. Therefore you would not be able to refinance because you would owe exactly what the property was worth. In today’s market, properties are not gaining value like they should so even after three to four years it is highly unlikely your home has increased in value and it is even possible your home decreased in value. Another con to no money down home loans is that your payments will be higher than if you had put money down on the home. Additionally, interest rates are higher with no money down home loans.

Surprisingly you do not have to have good credit to be approved for no money down home loans. Even people with low or bad credit scores can be approved for no money down home loans. Your credit score can range from anywhere between 400 and 800 points. Good credit is considered above 700 by most standards. If you have credit below 650 you may still be able to get no money down home loans options. If you have bad credit and go with no money down home loans your interest rate will be much higher than if you went for a standard loan with money down. Your monthly payments will also be much higher because your interest rate will take the monthly payments up.

There are many companies that offer financing for no money down home loans. Some of these companies also offer lending to people with bad credit scores. TLC Lending, Quicken Loans, First Equity Mortgage, Ditech, Lending Tree, Bank of America, USA Mortgage Company and National Mortgage are just a few of the many companies that offer no money down home loans as well as no money down home loans for people with less than perfect credit.

So if you are looking at purchasing a home in today’s buyer’s market but you aren’t sure if you can come up with 3% or 5% for a down payment look into many of the no money down home loans options.

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