Mortgages With No Down Payment Still Available

Despite the bursting of the housing bubble, it’s still possible to buy homes with no money down. Freddie Mac says its “HomePossible” mortgages can help buyers with limited credit or savings, including teachers, firefighters and members of the military. Although borrowers are sometimes required to show they have money in the bank to draw upon in a crunch, Freddie Mac said people can qualify for its no-money-down purchases with no cash reserves. However, borrowers must undergo homeownership education. Such programs can reduce delinquency rates by about 34%, the company said. Freddie Mac allows home buyers to borrow more than the purchase price if they use a second loan, sometimes called a piggyback, from special lenders such as government housing agencies, nonprofit groups and employers. Fannie Mae typically applies a similar requirement when home buyers borrow more than 97% of the price. Both companies are required to devote certain percentages of their funding to affordable housing, and no-money-down or low-downpayment loans can help the companies meet those quotas. One reason buyers borrow more than the purchase price is to cover transaction costs. However, it isn’t clear how many of these no-money-down purchases are taking place these days.