Low-Down Mortgages


DEFINITION of '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.


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BREAKING DOWN 'Low-Down Mortgages'

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.

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  3. Loan-To-Value Ratio - LTV Ratio

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  4. Mortgagor

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  5. Down Payment

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  6. Mortgagee

    An entity that lends money to a borrower for the purpose of purchasing ...
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  1. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  5. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
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    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>

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