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Money Q&A: Buying A Home With Nothing Down?

Q.

A friend bought a home with nothing down. Is that a good idea?

A.

Buying a house is a great investment and will result in a nice tax write-off at the end of each year. But a lower down payment means a higher monthly payment (without adding value to your house!). Assistance programs, such as Neighborhood Gold, offer a second mortgage at a great interest rate just for your down payment.

But the smartest choice is to look into an FHA (Federal Housing Administration) loan, which is a program for first-time homeowners. You only need 3 percent down, and the loans have competitive interest rates and are often easier to qualify for. The Best part is that the federal government insures the loan, so you don't have to deal with mortgage broakers who make a profit from you and don't always have your best interests at heart.

-- The Nest Editors

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