You may have driven by it a hundred times. The house of your dreams, but until now it was just a dream because it wasn't for sale. Then, this morning a for sale sign went up in the yard. You must have that house. You will settle for no other, but you don't have any money to use as a deposit or down payment. No need to panic. That house you have dreamed about can still be yours. Getting a mortgage without a deposit or down payment is possible.
Check your credit rating. To get a mortgage without a deposit or down payment requires more than adequate credit; your credit needs to be stellar. Obtain a copy of your credit report through Annual Credit Report's website.
Pay down debts. The lender is going to compare your monthly income to your monthly financial obligations. A high debt to income ratio may slide by if you have a healthy deposit to put down on the house but in seeking 100 percent financing, you want to show the least amount of current debt possible. Pay off as many debts as possible before applying for the mortgage.
Agree to purchase private mortgage insurance. Lenders typically require PMI on a non deposit loan. Even if it is not required, let the lender know you are willing to get it and have it built into the contract for the duration of the loan. The insurance pays for foreclosure expenses in the event you default on the loan. You pay the premiums and if you default the insurance company writes a check to the lender for foreclosure expenses.
Pay higher interest. Though the ideal scenario is to get the lowest interest rate possible, you can also consider agreeing to a higher interest rate in exchange for getting the loan without a deposit. Be sure to clarify before signing that you have the option to refinance for a better interest rate in the future.
Get a VA loan. Veterans Administration mortgages do not require a down payment and are available to anyone who served in the military and has good credit.
Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.