I've done tons of home loans for First Time Home Buyers and have done most of them with very little money out-of-pocket from the buyers. It's important to understand that even with 100% financing, which is difficult to structure these days, there are still closing costs, pre-paids and reserves to c
ontend with.
Closing Costs - Beyond the cost of the home, buyers are responsible for paying an underwriter, mortgage broker, property appraiser, surveyor, title company, state and county taxes, recording fees, inspectors and credit reporting companies to name a few. Sure, the buyer can pay some or all of these to sweeten the deal, but these are costs to consider.
Pre-paids - These are things that need to be paid before we can close. These are items like a full year's homeowners policy, the loading of escrow accounts and whatever pre-paid interest is required.
Reserves - Probably THE most important of the three. Basically, reserves are what money is available in case of a mishap or emergency. Financially responsible borrowers have a few house payments set aside in case of a serious auto accident or a job lay-off or other unexpected occurrence. The last thing a lender wants to here is that there won't be a nickel left after the moving van is paid for.
A good mortgage broker like me can show you how to best present your loan if a cash deficientcy is an issue, but money in the bank is a great idea, even if you don't need it!
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