They were all the rage — then the scourge — of the housing boom and bust. Now they’re back, big time: Home mortgages that require tiny or zero-down payments from buyers.
Several major lenders are offering 1 percent down payment loans, and now a large national mortgage company has gone all the way, requiring absolutely nothing down. Movement Mortgage, a top 10 retail home lender, has just introduced a financing option that provides eligible first-time buyers with a non-repayable grant of up to 3 percent. This allows applicants to qualify for a 97 percent loan-to-value ratio conventional mortgage — essentially zero from the buyers, 3 percent from Movement.
To illustrate: On a $300,000 home purchase, a borrower could invest nothing from her or his personal funds, while Movement contributes $9,000 from its resources. The loan terms also permit seller contributions toward the buyers’ closing costs to help swing the deal. Duke Walker, branch manager for Movement for the Washington, D.C., area, told me that although the program is brand new, it’s already “going great guns.”