Buying With Nothing Down

First-time buyers are among the most important groups in real estate. They make it possible for existing homeowners to sell and move-up -- and they also represent 40 percent of all purchasers according to the National Association of Realtors.

Buying a first home isn't easy and new buyers often look for financing with little or nothing down, programs such as those backed by the Veterans Administration (VA), the Federal Housing Administration (FHA), private mortgage insurance (MI) or through state-backed plans (so-called bond-backed and mortgage-credit certificates or "MCC" loans).

Now the Department of Housing and Urban Development (HUD) has announced that it will seek a new FHA program. Instead of requiring at least three percent down the new loan will ask borrowers for zero down, nothing.

This program raises three ideas.

First, efforts to help first-time buyers benefit everyone in real estate -- HUD estimates it's zero-down program will be used by 150,000 buyers, no doubt including some who would otherwise not be in the market.

Second, there are already mortgage programs available with nothing down. The VA pioneered the nothing-down concept decades ago and today a number of well-known lenders offer financing with nothing down. The FHA plan will boost the concept.

Third, buying with "no money down" still means cash can be required for closing costs, depending on how the sale agreement is written. For details, speak with your local real estate broker.

First-time buyers are among the most important groups in real estate. They make it possible for existing homeowners to sell and move-up -- and they also represent 40 percent of all purchasers according to the National Association of Realtors.

Buying a first home isn't easy and new buyers often look for financing with little or nothing down, programs such as those backed by the Veterans Administration (VA), the Federal Housing Administration (FHA), private mortgage insurance (MI) or through state-backed plans (so-called bond-backed and mortgage-credit certificates or "MCC" loans).

Now the Department of Housing and Urban Development (HUD) has announced that it will seek a new FHA program. Instead of requiring at least three percent down the new loan will ask borrowers for zero down, nothing.

This program raises three ideas.

First, efforts to help first-time buyers benefit everyone in real estate -- HUD estimates it's zero-down program will be used by 150,000 buyers, no doubt including some who would otherwise not be in the market.

Second, there are already mortgage programs available with nothing down. The VA pioneered the nothing-down concept decades ago and today a number of well-known lenders offer financing with nothing down. The FHA plan will boost the concept.

Third, buying with "no money down" still means cash can be required for closing costs, depending on how the sale agreement is written. For details, speak with your local real estate broker.