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By Vincent Bindi
Years ago, the only person that could buy a home in Irvine with zero down
payment using a new purchase money loan were Veterans of War (called a VA
loan). In the past several years, there has been an explosion of new loan
programs designed to fit most any buyers circumstances. Today, most anyone
can buy a home with zero down payment if they have sufficient income and
decent credit.
There are three factors that determine if you have sufficient income to
purchase a home with zero down payment, and they are: Purchase price of the
home, Interest rates, and debt to income ratio that the mortgage program
requires. These three factors are interrelated as described below.
The debt to income ratio is the monthly mortgage payment of the zero down
loan, divided by your monthly gross income (not your net take home income).
This ratio can vary from 35% to 50% dependent upon the loan program, and your
credit score. The monthly mortgage payment is determined by the purchase
price, current interest rates, and the type of mortgage program, such as 15
versus 30 years, fixed versus adjustable interest rate, etc. There is another
ratio that mortgage lenders look at which is the total debt to income ratio
which is too complicated to discuss here. This ratio also analysis other
debts that you may have such as car payments, credit card payments, etc.
You’re your credit rating is reported by three different reporting agencies
called Experian (formerly TRW), EquiFAx, and TransUnion. Your rating is
boiled down to a single number, called your FICO score. An excellent FICO
score would be about 800 and higher, and good score is about 700 to 800, an
average rating is about 600 to 700, and a poor FICO score is below 600. Some
mortgage lenders even have some zero down loan programs for borrowers with
poor credit ratings at somewhat higher interest payments and lower debt to
income ratios.
We are sometimes asked if you can buy a home with no money at all. The answer
is no under most circumstances. Even thought the down payment is zero, there
are sill some closing costs. Closing costs are typically comprised of loan
origination fees, loan processing fees, possibly loan points, Appraisal fee,
ALTA title policy, and escrow fee. But there are other options. We can
sometimes negotiate with the seller of the home to pay for a large part of
your closing costs. Our best result to date, is we helped a buyer purchase a
Condo in Irvine and their total out of pocket cash expense was $795! The
buyer was a single woman, who was a first time buyer, using a zero down loan
that we found for her, and her credit was average. We were able to convince
the seller into paying for all of her closing costs except for $795. That
home owner now has over $50,000 equity in her home which she can keep tax
free if she were to sell that home today!
To learn more about buying a home in Irvine with Zero or low down payment,
visit: http://www.Search-OCHomes.com. Mr. Bindi is a Real Estate Broker with
Keller-Williams Realty and has been selling real estate since 1989. Mr. Bindi
has sold over 800 homes in his career and specializes in working with home
buyers throughout south Orange County CA. To search the MLS for Homes for
sale at: http://www.Search-OCHomes.com
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