Zero Down Home Loans Are Back

On the surface, their zero-percent down loan sounds like a throwback to the risky lending practices that led to the Great Recession. At the time, many borrowers could simply state their incomes and not have to put down a dime.

During the housing bubble, a homebuyer could arrange for 80/20 financing, or piggyback loans, meaning a buyer would get one mortgage for 80 percent of the home price, and another to cover a 20 percent down payment. Then the lenders would sell the loans on the secondary market, washing their hands of any sort of risk from a default.

This time, however, is different, says the Lanes’ lender, Navy Federal Credit Union. The credit union brought back its zero-down product called HomeBuyers Choice in 2010 after a two-year hiatus. It charges a higher interest rate and holds the loans in its portfolio.

“Several years ago we started making them again because the performance of the people that we lent to even during the recession was fantastic,” said Cutler Dawson, the credit union’s chief executive.

Bankrate Senior Mortgage Analyst Holden Lewis said other than Navy Federal and NASA Federal Credit Union, which has no San Diego County locations, he doesn’t know of any other lenders that offer non-backed zero-percent down loans.

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Disclaimer: for information and entertainment purposes only

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