Revisiting zero-down lending

Real Estate Agent with Windermere Real Estate 11741

Zero Down!!!  Buy! Buy! Buy!

Amongst the firestorm of the market collapse and lending rules buying houses with zero-down money seemed to be one of the main punching bags for many people.  Heck, it was for me.  How many Realtors have said this line, "Conventional and FHA loans haven't changed much over the last few years it's the zero-down, no income, high ratio, NINA loans that have caused this problem."  And yes, that statement is true, partially, however lets look closer at the "zero-down" part.

Last week at the NAR Leadership Summit I found it very interesting to see a report about loan delinquencies.  The report compared conventional, FHA, VA, and sub-prime.  Naturally sub-prime was way up, nearly 1/4.  FHA had a slight rise, conventional and VA a very slight uptick but were mostly flat.

NAR's chief economist pointed out in the data that it's really interesting to see the VA has not seen a big rise in delinquencies.  As most of us professionals know, VA is well known for it's zero-down option for veteran buyers.  What was pointed out was that the lack of issues with VA loans shows that zero-down financing simply was not/is not the problem in financing issues. 

That made quite the impression on me, zero-down financing is not the issue, obviously it was the incredibly relaxed standards of sub-prime loans.  It will be interesting to see if the National Association of Realtors makes some noise with this data, I think they should.


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Sonja Patterson
Keller Williams - BV - College Station, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

Interesting!  I saw a home in our subdivision that was recently purchased w/ VA financing(which you don't see very often).  The home  SOLD for $340,000.  Seller contribution to buyer's closing costs $9000 and the new loan amount....$347,310.  Sounded to me like a foreclosure waiting to happen.  But hey...maybe they have all their ducks in a row...and have enough monthly income to swing it.  I sure hope so. :)

Sep 01, 2009 11:21 AM #1
Brint Wahlberg
Windermere Real Estate - Missoula, MT
The Wahlberg Team

The thing is that VA borrowers must meet the same requirements as all borrowers now a days, so ratios, credit, income, etc counts.  That was the real issue, not the amount of down payment.

Sep 01, 2009 11:45 AM #2
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Brint Wahlberg

The Wahlberg Team
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