For a while there, it almost seemed like home loan companies were coming out of woodwork, practically begging us to buy a home, refinance a home, add a home equity line of credit. And they wanted to do it with nothing down. All of it financing 100% of the cost of the home. In some cases, loans would even finance more than 100% of the cost or even appraised value of a home.

Today, they seem to be scarce. Where have they gone? Are zero down home loans a thing of the past?

Yes and no. While it is true that banks and mortgage lenders are a lot more hesitant to offer mortgages to borrowers with poor credit, nothing down, no discernable income, and no demonstrable way to pay for the home loan, it is simply not true that zero down home loans are completely unattainable.

Harder to come by, but not gone

Make no mistake. To qualify for a zero down mortgage these days, you have to fall under a set of special circumstances. If you have a very good credit score, you may qualify for such a loan. Or, if you have served honorably in the United States military, you certainly qualify for a zero down loan through the Veteran’s Administration (VA). Additionally, there are a number of government programs available to help people buy homes, especially in areas that are either out very rural areas, or in the inner cities.

The almighty credit score

Keep a good eye on your credit score. If your credit is not good enough to qualify for a zero down home loan, and you didn’t serve in the armed forces, there are still things you can do. If nothing else, bide your time, work on paying your bills off (thus improving your credit score) and putting some money aside for a down payment. Even if you do end up being eligible for and opting for a zero down home loan, having a nest egg stored up is always a good idea before buying a home.

Will they disappear altogether?

There’s no way the average person can accurately guess what the housing market will do. Even experts in the field disagree. But, it stands to reason that as the market stabilizes, buyers with little or no money for a down payment will soon be able to negotiate a mortgage with their bank or lending institution again.

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