Low-Down Mortgages
Mortgage programs which require a minimal down payment. Most low-down mortgages require a down payment of between 3% - 5% of the property value; however, some lenders have programs for 100% financing (or 0% down payment). Low-down mortgages are designed primarily for borrowers with a low to moderate income and first-time home buyers. Other borrowers elect to use low-down mortgages in order to use their down payment elsewhere. Low-down mortgages are offered through several sources, including state and local governments, the Federal Housing Administration, the Veterans Administration and individual lenders. Investopedia Says:
Low-down mortgages have helped millions of lower income and first-time home buyers achieve homeownership. Some programs require the borrower to attend a brief borrower education seminar prior to obtaining financing. Borrowers who have a substantial down payment, but use low-down mortgages to use the down payment for other purposes add a layer of risk to homeownership. A careful analysis of the risks and opportunity costs, based on sound financial principals, should be run before making a decision to use down-payment capital for other purposes. Related Terms:
125% Loan
Down Payment
Loan-to-Value Ratio - LTV Ratio
Mortgagee
Mortgagor
Private Mortgage Insurance - PMI |