Within the mortgage industry, there always seems to be a great new product around the corner that benefits the consumer. Since January 2000, the latest phenomenon to surface is the "zero down" mortgage. This mortgage seems to fit two distinctly different types of borrower's; 1) Your credit is excellent and you haven't yet saved any money for a down payment (or you would rather use your savings 2) for investments, to furnish your new home, or whatever) and your credit is less than perfect and you haven't yet saved any money for a down payment. Let's take them one at a time:

1. If you have excellent credit, loans have just come into existence since January 2000 that allow you to put "no money down". This means that 100% of the purchase price can be in the form of a mortgage but they do require that 3% must be contributed by the purchaser toward closing costs and escrows. This money can, however, be in the form of a gift. Interest rates on these loans are typically around slightly higher than those available to conforming borrowers, i.e. say around ½% higher depending on the loan amount.
   
   
2. This loan is typically viewed as a temporary solution to a short-term problem, i.e., no money available and less than perfect credit. They can be structured as one loan or two separate loans consisting of a 1st Mortgage for 80% LTV and a 2nd mortgage for the remaining 20%. The interest rates are higher than normal loans due to the high-risk nature, but are typically determined based on the borrower's credit scores. Scores in general must be 600 or above and you must have a good payment history over at least the last year. Also you must have at least three tradelines (creditor's) in existence to qualify.

With a Zero Down Payment Loan, you can buy a house NOW, benefit from a sizable interest deduction each year, and begin to create equity in the house of your dreams.