first time mortgage - chances of getting approved? no down payment?

ok so i have a few questions. my husband and i are looking into buying our own home, after ive been renting for 3 yrs, hes been renting for 2. we have an opportunity to buy a great house from a friend private sale at a great deal. they're selling it for $140,000 which is below the appraisal because they got a good deal on the place when they purchased it, so they want to pass those savings onto someone else. how GOOD does your credit have to be to get approved for a mortgage? my husband has had a credit card for a year now and we've only missed one payment. however, he's had a few bills in his name that we always pay off but not always by the due date. will that ruin our chances of getting approved? also, whats this no down payment business? is it a scam and do you pay interest out of your a s s? lol we dont really have anything saved, but could come up with maybe about $2000 for a downpayment. is that even CLOSE to enough? im new at this, so im learning as i go.

Update:

also, if say they want the closing date to be jan. 1st, do we have til then to come up with a 5% downpayment, or would we need to have it right away? for exazmple, if we knew we would get approved for the mortgage as long as we had a 5% downpayment, could we take some time to save it up (over say, 4 months) and then get the mortgage, all the while have them knowing we're buying the house? they're family friends, private sale.

10 Answers

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  • Anonymous
    1 decade ago
    Best Answer

    FHA requires a 2.25% down payment.

    A seller can pay ALL of your closing costs..but it has to be negotiated.

    It's fairly simple to achieve.

    MyCommunity requires a 620 with zer down...and has very low PMI payments at that credit score.

    FHA has no credit score requirement but you cant have no lates in the last 12months

  • Anonymous
    1 decade ago

    To be honest it's getting more difficult to find 100% financing out there, but you do have 2 things on your side, you may qualify for an FHA loan and hopefully the house would appraise for much more then you're paying for it. Typically lenders only want to finance 80% and to do 100% you either need a 2nd mortgage, usually with a much higher interest rate or you'll be paying mortgage insurance. Also with some lates on your credit I'd immediately check your credit report and see what your scores are and if they need to be improved. You'll want at least over a 700 to get the best rates. Finally you should speak with a broker now, but don't lock the loan until around december if you want to buy near Jan 1, that way you'll have time to save for the closing costs and anything you want as a down payment because the lender will want to verify that you have that amount. I'm assuming you won't be getting any seller concessions since they are giving you the house under value so your closing costs could be up to $4,000 depending on insurance, attorney fees, inspections, appraisal, comittment fees, origination fees, taxes, title & homeowners insurance and probably a few things i'm forgetting. Also you'll need 2 years of continuous employment. Good Luck.

  • 1 decade ago

    It seems like you guys know nothing about purchasing a house. You need to have excellent credit in order to get a no down payment plan. This plan is for people who have excellent credit but don't have money for down payment. This plan sounds very attractive; however, you have to remember that every balance that you have on the house is charged interest. For example, if you plan to put $0 down payment, $140,000 is still owed, which interest will be added on. If you put $14,000, this amount would be deducted from the balance and interest would only be added to the balance after deducting the down payment. In order to become approved for a mortgage loan, you need at least a good credit and a decent income. If you can't afford the monthly mortgage, it's not time for you guys to purchase a house yet. It seems like your chances of getting a mortgage loan would be slim due to past due payments; however, if you do get approved, the interest would be very high. Before being approved for a loan, you guys would need to show at least 2 months bank statements to prove that you guys are financially stable. When the seller says they want the closing date to be January, it means everything needs to be done by that date. You will not be given extra time to save any money. There will also be closing costs after the loan is approved. You'll have to understand that you'll need extra money for renovations and annual property taxes. It doesn't seem like you guys are financially ready.

  • Anonymous
    1 decade ago

    I am a mortgage banker with more than 20 years experience so I may have more accurate information than those who are not in this industry.

    First of all, yes there are loans that offer 100% loans to first time buyers who have excellent credit. The most widely known is called Fannie Mae Flex 100 and is available to almost every lender. The interest rate is slightly higher but not unreasonably so.

    As to your credit - Creditors do not report loans as delinquent until they are at least 31 days past due so just missing your payment date by a few days makes no difference in your credit rating at all. You can get a FREE (and I mean free, you don't have to sign up for anything to get it like you do on Free Credit Report.Com) at the US Government site (annualcreditreport.com). Once you have seen your credit scores look for the middle score of the lowest scoring borrower and you will know what mortgage lenders use for your score.

    Even though the lender will finance 100% of the sales price you will still need to pay your closing costs which will include and pro-rated property taxes, a full year's homeowners insurance premiums and other customary closing costs for your area.

    FHA is another viable option to compare with Fannie Mae Flex to see which is most cost effective for you.

    If the property qualifies, also ask about the Rural Housing loan. They will finance 100% and all of the closing costs. Their score requirements are also extremely lenient. Not every lender can do thsi Federal program but it is dynamite if you qualify.

    Stay away from the sharks on this site, you have a much higher risk of being taken advantage than you would if you met with a local mortgage banker who can look at your credit, financial abilities and educate you so that you may make informed decision. Remember, rate is only one component that ensures you get the loan that suits your needs and circumstances.

    Good luck

    Source(s): 20+ years as a direct mortgage lender
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  • 1 decade ago

    You may need more down , No money down is considered Sub Prime lending , and it is about a thing of the past ...if you get it see if you can afford it based on a 15 year fixed . If you finance a home for thirty years with a so so interest rate you are going to pay over 100 grand extra just in interest .. I will do the math for you at 140 grand

    140,000.00 at 6.5% for 30 years your monthly payment is 884.90 for a grand total of 318,564.00

    140,000.00 at 6.5% for 15 years a monthly payment is 1219.55 for a grand total of 219,519.00

    saving over 100 grand in interest , if you can not afford the extra 334.65 extra per month then chances are you can not afford this home , because the cost of living will go up , and if the democrats take the whitehouse it will go up more with higher income taxes at least double what they are because of this Universal Health Care ....also if the market keeps going down , the fixed rate can go up if it gets bad enough with the inflation ...this little half point cut done by the feds is nothing , it will not stop the foreclosures on homes people can not afford ... nor is it going to fix the housing market , nor stop inflation...

    Most agents will tell you it is OK to have 30 +% of your gross income going to a mortgage . agents want your money , and care nothing about you , or your ability to keep your home , do not go more than 20 -25 % of your net ... the so called tax benifits of home ownership is not all that great as it is made up to be , unless you itemize your taxes it does nothing anyway , and if you itemize personal taxes , it also flags you for an audit ( they are lots of fun)

    Also think about the insurance , and property taxes , do not let them "Escrow " this money , they do not hold your money to pay these things for nothing ...and do not let them pick your insurance company , it will protect them more than you ..

    Also consider saving more , in 10-15 years you will need a roof ( at least 10 grand ) ..if this house is a slab house you will have bigger problems during this time , the slab will settle in the ground causing water , adn sewer lines to burst , it costs 600 dollars per foot to bust up the concrete , and repair the concrete floors after the work is done , it does not include the repair to the lines

    Older homes not on slabs , will settle in the ground as well , you will have to jack up the floors , sometimes re inforce the foundation which is very expensive , there is more to this than just buying a house , so please consider this ,and all things involved ...

    If you stay with in 25 % of your net income ( not gross ) and save 10-15 % you will be better off in the long run .....

    Of course the Agents ( and lender ) will try to get you to go more with the income percentage and finance longer , because the more debt they create for you , the more you spend , which is of course is the more they make , do not get in over your head ...credit is a dangerous thing , credit gives borrowing power , and you risk everything , cash gives buying power , and you keep what is paid for ....

  • 1 decade ago

    There are a lot of government funded programs for folks with any range of credit and low down payments. $2000 will barely cover closing costs however. Just google FHA programs in your state and see if they offer no down payment mortgages. I certainly think it could be done, but you'd have to be slightly creative with the closing and down payment costs.

  • 1 decade ago

    Ask your family friend if they will consider a lease purchase option. That way you get to buy the house you want and part of your "rent" to the family friend goes to defray the cost of the mortgage. Save your money for a down payment and fees while you are doing this and then go out and qualify for a loan that you can afford.

  • Anonymous
    1 decade ago

    It's getting more difficult to find 100% financing out there.

    But I found interesting information about your answer & the best options here.

    http://all-mortgage-calculators.blogspot.com/2007/...

    Good luck!

  • Anonymous
    1 decade ago

    First, don't contact the predators posting here. They are running scams and will take advantage of your inexperience.

    Have you talked to them about owner financing? This might work best for you, you pay them every month, including interest, instead of a bank.

    How good your credit will need to be will be effected by your income and other debts. 650 at least, the higher the better.

  • 1 decade ago

    Hi,

    Checkout http://homefunding.consumerplanet.info for finding low interest housing loans to suit your budget and own a dream home. Good luck!

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