In many realestate markets across this country, the upward trend in home prices does not equal the countries average household income. Hence, some people are not capable of saving money for the necessary down payment. In an ideal world, mortgage companies would prefer applicants who have a down payment of at least 5 percent, in addition to the amount you will need for closing costs. Regrettably, this happens less and less as people continue to spend not only what they are currently making, but future earnings also. Consequently, many homebuyers have been taking advantage of the zero down loan. How Does a Zero Down Loan Work? Fortunately, most loan companies recognize how tough it is to save for a down payment. Consequently, numerous mortgage lenders created a special mortgage program that makes it possible to purchase a home with little or no out-of-pocket expense. If you do have the down payment you will receive a much lower interest rate as your LTV or loan-to-value is lower giving you a lower perceived risk. There are some options for obtaining a zero down loan. For example, some mortgage lenders offer what is called the 80/20 zero down loan. This involves offering a first mortgage for 80% of the asking price, and a second home equity loan for the remaining twenty percent. This choice is very useful, as homebuyers will avoid paying private mortgage insurance. Homebuyers can also obtain a zero down loan for 103% of the asking price. This is advantageous because it permits homebuyers the ability to not only put zero down, but they are able to finance the closing costs into the zero down loan. How do I Find a Zero Down Loan? If you are looking to purchase a home with zero down, contact a mortgage broker. There are some mortgage programs that offer a zero down loan option, you must be willing to look for them and work through any obstacles that arise with your mortgage broker. Mortgage brokers have access to a tremendous array of zero down loans offered by private money lenders, government programs, sub prime lenders, etc. meeting the qualifications for a zero down loan can be hard and trying nowadays, but well worth it in the end for most.