Are Low- and No-Downpayment Mortgages Safe

Are Low Down Payment Mortgage Loans Good Or Bad?

Video Transcript

Let us just agree – low-down payment loans and no down payment loans are neither a bad thing nor a good thing — they’re just a thing.

Because when you’re buying a house and you choose to make a small down payment or no down payment at all, it doesn’t mean you can’t afford a home or that you shouldn’t buy one. It just means that you’d rather use your cash for other purposes than making down payment. That’s it.

The better gauge for whether a person can afford a house is how their housing payment affects their monthly budget.

That’s the true measure of affordability.

And, when owning a home doesn’t affect your ability to pay your bills, or save for retirement, or have cash available for an emergency, then you can afford it.

And that’s what low and no-downpayment mortgages are for — to keep you from tying up too much of your money in your house when you think you might need it for other things.

Because life doesn’t move in straight lines and when things go sideways — and they always do — it’s great to have money in the bank. Low downpayment loans aren’t for everybody but they can be an important part of your financial bigger picture.

Happy homebuying!

Dan Green

Dan Green

Dan Green is a former mortgage loan officer and an industry expert. He's appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.

Subscribe to our Newsletter

Receive real estate and mortgage news by email weekly. Personalized for you & your specific homebuying goals.