No Down Payment Mortgages


No Down Payment?  Try Flex Down or Cash Back

Despite recent federal legislation there are still two ways in which you are able to purchase a home even if you do not have a down payment.

The first is called a “Flex Down” plan, which recognizes that you have actually borrowed the required 5% down payment from a source other than the lender making the first mortgage (i.e. the remaining 95% of the purchase price) available to you. In this case the loan (now called a “Non-Traditional Source”) must be disclosed up front and the payments on the loan will be included when calculating the corresponding debt service ratios.

The second is to take advantage of a “Cash-Back” plan offered by a very small number of lenders who will allow the 5% cash back element of the mortgage to be used as the down payment. In this case the mortgage insurer only covers the first 95% of the purchase price in the event of default, and the lender is on the hook for the remaining 5%, or the “Cash-Back” portion.

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