First, there is the 100% One Loan, the financing of 100% of the value of the loan, all under one set of terms.  As you read on, you will see other options that aren't structured in this simple way. 

Those of you that have good credit, often referred to as conforming borrowers, will reap the reward of receiving an interest rate comparable to a traditional mortgage, but sub-prime borrowers will not be so lucky.  Also, its simple structure is free from terms not seen in other mortgages, but the modified interest rate acts as the counterbalance.

Because it allows the purchaser to obtain a property without any personal investment, the risk is then passed on to the buyer in the form of a higher interest rate.  So, you get to own a house before your savings allow you to, but you end up making a larger portion of the payments to interest instead of equity.  Even though conforming borrowers do get a better rate than sub-prime, they still have to contend with mortgage insurance, which can range from .55% to 1.94% of the loan amount.  Luckily, this mortgage insurance can be repealed after 20% equity is established.  Lastly, when it comes to closing costs, conforming borrowers can expect the seller to cover up to 3% of the purchase price, while sub-prime will receive a more generous package of up to 6%.

The 80/20 mortgage is another very common zero-down financial option. It favors sub-prime borrowers, especially in the long run, as they receive a lower overall interest rate.  The way this type of mortgage is structured between two separate loans: one for 80% of the loan value, and a second for the remaining 20%.  Because of its preferential interest rate, this is the most common zero-down mortgage.  For conforming borrowers, it lends the advantage of avoiding the costly mortgage insurance that can tack on to the borrowed amount.  This insurance is not designed to protect you, the consumer, from any financial woes, but rather protests the lender from losses incurred in default loans or foreclosures. 

Of course, with so many seemingly advantageous aspects, there are the downsides.  Primarily, the closing costs are added to each loan, not just one.  (The closing costs covered by the lender are the same as mentioned in the 100% One loan, with 3% for conforming borrowers and up to 6% for sub-primers)  Also, the perception by borrowers is that with having to pay two different loans, you end up paying more for your property.  In actuality, the overall costs will be comparable to traditional mortgages for your credit worthiness.

Another common zero-down mortgage is the 2/28 or 3/27.  In each of these options, the first number indicates the number of years of the 30-year mortgage that will be on a fixed interest rate.  The second number refers to the remaining years, which will be considered an adjustable rate mortgage, or ARM.  These loans typically have the benefit of rate caps, which limits the fluctuation of the interest rate after it enters into the ARM.  The top end of the cap can be very favorable, especially for sub-prime borrowers. 

The three options you just read about- 100% One Loan, 80/20, and 2/28 & 3/27-  can be seen as "band-aid" loans, allowing consumers like you to own property without sufficient finances or credit, but with the flexibility to repair your financial standing in short order.  After taking a few years to re-establish your credit, you then have the ability to refinance the mortgage, presumably at a lower rate and on fixed terms.  The next listings of zero-down mortgages include some government-subsidized plans, as well as strategic locations.

A VA Loan can be of great assistance to those of you that are veterans of the United States military.  Along with not requiring a down payment on your property, closing costs can be covered by the lender, as well as extreme flexibility for those with bad credit or no credit. 

A USDA Rural Housing loan is a 100% loan that is historically known as a farm loan.  While it allows you to forgo a down payment, a good credit history plays a big part in obtaining this type of financing, but it is not impossible to receive it with less-than-stellar credit.  Because it is backed by the US Department of Agriculture, you will need to meet several lending criteria aside from credit worthiness.  The property will need to be in an area the USDA does not consider urban, and you will have to meet income limitations, among others.  One upside is that the seller can cover all of the closing costs.

Emerging markets can also afford the opportunity for a zero-down mortgage.  This program allows consumers to build credit by tracking payment of other debts and utility payments.  Basically, the agencies that offer the mortgage in emerging markets want to see that the lender is taking steps to establish or repair their credit, and that they have financial stability.  This program does have income limitations, but they are normally higher than the USDA program mentioned earlier in this article.  Also, closing costs can be paid by the seller up to 6%!

State and municipal governments offer zero-down programs, but their availability is hit-or-miss, as it depends on funding from agencies that can swing with administration changes and legislative amendments.  Oregon recently unveiled its Oregon Bond Loan which, like others, has various requirements that tend to be stricter than other zero-down options. 

The four government-sponsored programs mentioned here will require you do to some legwork, which can include visiting your local government offices.  Unfortunately, most private lenders won't have any information on these programs, which is rather surprising.  Here are some contact info for you:

• Fannie Mae - 3900 Wisconsin Avenue NW, Washington, DC (202) 752-7000 http://www.fanniemae.com/
• HUD/FHA - 451 7^th St., Washington, DC 20410 http://www.hud.gov/
• Freddie Mac - 8200 Jones Beach, McLean, Virginia 22101 http://www.freddiemac.com/

Make sure to ask for special purchase programs when you contact your local agencies.  They may offer alternatives as parts of a partnership with local construction companies that build affordable housing.

These types of government/industry partnerships provide a special rate for the construction of homes that are then subsidized by the local agency.  For qualified consumers, a house that is valued at $125,000 can be sold by the agency for $85,000.

Local building associations can also be a route to explore for zero-down mortgages.  They have programs for residents within their area that can be valuable resources.

The FHA Loan, offered by the Federal Housing Authority, is another financing option, but in fact, it is not a zero-down loan at all.  This program requires a 3% down payment, but provides resources to finance that down payment.  This down payment financing can then be used in conjunction to cover the remainder of the mortgage, as well as the closing costs, which can be paid up to 3% by the seller.

There are strict guidelines to follow to become eligible for the FHA Loan As with most other government programs.  This is the trade off in gaining access to capital that can be used toward real estate: the government insures your mortgage and carries the risk in case of default or foreclosure, the lender is freed of risk through the government backing.

There are a variety of considerations in choosing the plan that best works for you and the lender involved.  Not only are there a number of privately-backed programs, but state and municipal governments can also assist you in your home search.