| A few years ago, some barriers that could | | | | lender in case the borrower defaults on the loan. |
| thwart people from buying a house were | | | | Many consider premium mortgage insurance as |
| eliminated by some lenders. One of these barriers | | | | the best bet for people who do not have enough |
| is the down payment requirement. This happened | | | | money to buy a new house. Then there is also |
| during the mortgage boom. Back then, the | | | | the Federal Housing Administration (FHA) Insured |
| housing industry was making big waves. Because | | | | Loans. While it requires a 3.5 percent down, first |
| of this, no money down mortgage loans became | | | | time buyers can monetize their tax credit of |
| a popular choice among fresh graduates, young | | | | $8,000 and use it to offset the down payment. |
| professionals and even first-time home buyers. | | | | This is possible because state-run housing finance |
| But because of the increasing number of | | | | agencies as well as non-profit organizations can |
| mortgage defaults, some lenders have tightened | | | | help borrowers meet the required down payment |
| its loan requirements. However, people can still | | | | on an FHA loan. |
| avail of no money down mortgage loans. One is | | | | No money down mortgage loans is especially |
| through private mortgage insurance or PMI. | | | | designed to cater to people who are continuously |
| Basically, it enables the borrower to avail a | | | | putting off home ownership because their savings |
| mortgage loan without having to dish out cash | | | | are not enough to meet the required initial |
| because PMI replaces the requisite down | | | | payment. |
| payment. This type of insurance protects the | | | | |