A few years ago, some barriers that could thwart people from buying a house were eliminated by some lenders. One of these barriers is the down payment requirement. This happened during the mortgage boom. Back then, the housing industry was making big waves. Because of this, no money down mortgage loans became a popular choice among fresh graduates, young professionals and even first-time home buyers.

But because of the increasing number of mortgage defaults, some lenders have tightened its loan requirements. However, people can still avail of no money down mortgage loans. One is through private mortgage insurance or PMI. Basically, it enables the borrower to avail a mortgage loan without having to dish out cash because PMI replaces the requisite down payment. This type of insurance protects the lender in case the borrower defaults on the loan. Many consider premium mortgage insurance as the best bet for people who do not have enough money to buy a new house. Then there is also the Federal Housing Administration (FHA) Insured Loans. While it requires a 3.5 percent down, first time buyers can monetize their tax credit of $8,000 and use it to offset the down payment. This is possible because state-run housing finance agencies as well as non-profit organizations can help borrowers meet the required down payment on an FHA loan.

No money down mortgage loans is especially designed to cater to people who are continuously putting off home ownership because their savings are not enough to meet the required initial payment.