Buying a home is an expensive proposition. Not only do you have to worry about the cost of the home itself, but also the closing costs and other associated fees. One of the main things that keep people out of the house hunting market is the down payment that has traditionally been called for when obtaining a mortgage. Typically this down payment was between ten and twenty percent of the total cost of the home.

In recent years, that percentage has been gradually lowered and even eliminated in some cases, both through traditional mortgage lenders and through alternative sources of funding. In this article we will take a look at some ways you can get a home with no money down, what you will probably need to do in order to take advantage of the offer, and some of the risks of choosing to do so.

Where can I get a loan for a house with no money down?

As we mentioned above, a deposit on a home used to be required before purchase. A sagging real estate market at the turn of the century, however, had traditional lending companies looking for a way to revive their mortgage sales. The deposit was, in fact, a government stipulation that came into being after the Great Depression, along with various other checks and balances to ensure less “paper fortunes” and more real money.

Lending companies were successful in lobbying various governmental bodies, and in many areas the percentage required to make a purchase gradually went down. Around 2003, the regulations pretty much disappeared in the United States, and Canada was not far behind.

This opened the door for a whole new demographic when it came to home buying opportunities. Not only that, but other organizations were able to offer mortgages as well. Banks and other traditional companies offered mortgages with minimal down payments, but now financial companies such as Wells Fargo and Manulife could also set up their own mortgage structures. Typically, these would take the form of huge lines of credit, which included one’s mortgage.

What you can expect

In order to be approved for this type of no money down mortgage, you will need to make sure that your credit record is very good. The better your credit rating, the lower your required down payment will be. You can also expect the lending institution to still make inquiries as to your salary and job status, and depending on your security in this area, you will find your deposit may once again go down.

A note of caution: No down payment will mean a higher monthly payment on your mortgage. It will also mean that in the long run, you will pay more for your home, as the interest costs will be greater from the very beginning. Still, most homebuyers will look at the potential equity to be gained from a home purchase and balance that against higher payments, and be happy with the result.

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