How is this possible?  One, if not all, of those three things can prevent a person from being pre-approved for a mortgage loan in Wisconsin.

Well, good news, there has been a mortgage program that has been around for awhile and now it has started to become more popular than ever.  The recent events of our economy has eliminated many mortgage loans that used to allow the no down payment option, or at least a low down payment.

We hear more and more, everyday, that banks are tightening their guidelines and have made it more difficult for people to get pre-approved for mortgage loans in Wisconsin.

Well, I will continue to remind everyone that the option of a no down payment mortgage loan is still available.  Better yet, we don’t see this program going away…ever!

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The USDA Rural Development has a housing loan that allows the following:

• No down payment.
• No monthly mortgage insurance. (PMI)
• No cash reserves are required.
• No minimum credit score is required.
• No limit on cash assets.
• Repairs and closing costs can be financed up to 102% of the home’s value.

This mortgage loan program is very good for first time home buyers and lower income borrowers.

Are looking to purchase a home in an area that is eligible?
Not sure what areas and homes are eligible? 

Well, I can help you look up a specific property to determine if the area is eligible for a USDA Rural Housing mortgage loan in Wisconsin.  Go to my contact info page on this site and I would be happy to help you.

Here are the three options you have when looking for a true no down payment mortgage loan. I’ve also laid out some details of each program, so you can get an idea of what they are all about.

1. VA (Veterans Affairs) Mortgage Loan - Whether you or your spouse are currently in active duty or a military veteran, you can be eligible to obtain a VA mortgage loan. No down payment is required with this loan program. A VA loan has many benefits for military personal, that is should be taken advantage of. Here are the list of benefits that come with a VA mortgage loan…

- No down payment.
- Less of a PMI (private mortgage payment) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a VA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

You may be able to obtain a VA loan multiple times. A form called the, Certificate of Eligibility, is required when applying for a VA loan and this determines whether or not you have enough “eligibility” left to qualify for another VA loan. Sometimes, a borrower doesn’t use all of his/her eligibility, which can be used again for a future purchase on a new home.

2. Rural Housing Mortgage Loan - If you find a home in a rural area and your adjusted annual gross income doesn’t exceed the moderate income limits for the area, you can qualify for a rural housing mortgage loan. No down payment is required with this loan program. A rural mortgage loan has many benefits for a borrower that is looking to purchase a home in a rural area. Here are the list of benefits that come with a rural mortgage loan…

- No down payment.
- No PMI. (private mortgage insurance)
- Favorable and secure 30 year fixed interest rates.
- Seller can pay up to 6% of the purchase price, to the buyer, for closing costs and prepaids. This allows the buyer to truly not have to bring money to closing, since there is no down payment.

You may finance up to 102% of the appraised value or purchase price, whichever is lower. The 2% is meant to finance the closing costs and prepaid items like the escrow account, so you truly do not have to bring money to closing.

3. FHA Mortgage Loan With A Down Payment Assistance Program - If the seller agrees to participate in a down payment assistance program, the buyer can use these funds towards his 3% down payment when applying for a FHA loan. This is how you can truly do a no down payment FHA mortgage loan. A down payment assistance program allows the seller to gift 3% of the purchase price to a 3rd party service, which in turn the buyer can use the 3rd party service and it’s funds for the down payment. Here are the list of benefits that come with a FHA loan…

- No down payment, when using a down payment assistance program.
- Less of a PMI (private mortgage insurance) payment.
- Favorable and secure 30 year fixed interest rates.
- No minimum credit score to qualify. Even if you have bad credit, a FHA loan is approved based on your ability to show you can afford the mortgage payments.

You have two ways to be approved:

1. Approval through an automated underwriting engine.
2. A manual underwrite. Sometimes, the automated engine doesn’t approve your application, but that’s OK. It still allows your application to be underwritten manually by an underwriter. Basically, if you can show ability to pay the mortgage with good employment history, you will most likely be approved.

These are the only 3 options that are available in this current lending environment. Fortunately, there are no down payment options available and I’m glad to say I specialize in working with first time home buyers to help them obtain these types of mortgage programs.

If you don’t know by now, MGIC, and other 3rd party private mortgage insurance (PMI) companies are only insuring up to 97%. What this means to you, is that now you have to put a minimum of 3% as a down payment. No matter how good your credit score or how much in liquid assets you can prove, it’s just a new guideline they have put in place.

So, how do you still do a no down payment, 100% financing, on your purchase or refinance in Wisconsin? Here are the 2 ways that are simple and most people have no idea they can do this.

1. Have the seller pay for your down payment! If you are looking to buy a home and have little to no money for a down payment, ask the seller to pay for the down payment. If you are working with a realtor, explain to him/her that you want to write in your offer to purchase that the seller pays for your 3% down payment. Are you wondering what loan program allows this? Wisconsin FHA loans allow the seller to contribute to the buyer’s down payment.

Also, if you have the opportunity, have the seller pay for your closing costs. Think about it, you are in a buyer’s market and sellers that have been trying to sell their home all winter and are just itching to get rid of it. If I were selling my home, and the only thing that stands between selling my home or not, is paying for 3%of the buyers small down payment…where do I sign!

2. You can have a relative gift you the down payment. These lenders are only requiring that the relative that is gifting you the funds, fill out a gift letter form and show proof the money came from them. Simple. For some reason, I run into many people that didn’t know their, rich uncle or grandparents, can gift them the small 3% for a down payment.

Learn more about no down payment mortgage loans for first time home buyers.

A recent article, I have copied below, talks about a bill that should reach President Bush soon. Hopefully, it will allow people looking to buy homes with no money down to qualify for an FHA loan still.

Currently, people need 3% as a down payment for FHA loans. If this bill passes, and it’s looking better than ever, it could help tremendously with those having a hard time getting financing for a new home or trouble refinance their existing loan.

Here is the link: Subprime alternative: FHA reform deal close

It seems with this whole credit crisis lately, people are afraid if they have “bad” credit they cannot be approved for a mortgage loan. Especially, the current home owners who are in an adjustable rate mortgage and their payment is about to increase.

In a nutshell, the FHA (Federal Housing Administration) loan is insured by the federal government for the purpose of helping lower income and less than perfect credit borrowers qualify for a mortgage loan. It is most known to help first time home buyers that have little to no money down when buying a home. Also, many people don’t realize that even someone with a middle 500 credit scores can be approved!

Here is a government website link.

Below I’ve listed the benefits an FHA loan has for the first time home buyer and the existing home owner trying to refinance:

FHA Benefits For First Time Home Buyer & Existing Home Owners That Want to Refinance:

• Little or no money down for the down payment.
• You don’t need much credit history. Example: a college student that doesn’t have bad credit, but just minimal credit history.
• There is no minimum credit score to qualify.
• Low interest rates that can compare to regular rates people get with good credit!
• Lower PMI (private mortgage insurance) than your standard mortgage insurance someone would pay with less than 20% as a down payment.
• If you wanted to buy a home and use the equity to remodel the home right away, an FHA loan is also the best option for that.

So, if you know someone having trouble financing their first mortgage or refinancing their existing mortgage, have them contact me. Keep in mind not all banks and mortgage companies are licensed to do FHA loans. This may be the reason another company couldn’t help out.