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Navy FCU offers zero-down home loans

By Holden Lewis ·
Monday, April 5, 2010
Posted: 11 am ET

Navy Federal Credit Union is offering no-down payment mortgages -- with no mortgage insurance -- for qualified homebuyers.

The zero-down HomeBuyers Choice Mortgage is available for purchases up to $650,000. Homeowners can refinance under the program for up to 97 percent of the home's value.

These loans are available to Navy FCU members, which has broad eligibility criteria. Basically, any uniformed or civilian employees of the Department of Defense are eligible to join the credit union. Retirees, too. And family members.

According to National Mortgage News, the zero-down program is for people with good credit scores who can provide full documentation of their finances. There is a total debt-to-income ratio ceiling of 41 percent.

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Holden Lewis
April 07, 2010 at 12:34 pm

The Fannie/Freddie guarantee covers interest and principal before the home is sold (in foreclosure, a short sale, or after a deed in lieu). But the Fannie/Freddie guarantee doesn't cover the shortfall if the home is sold for less than the outstanding loan amount. That's what mortgage insurance pays for.

Holden Lewis
April 07, 2010 at 12:30 pm

I don't know of other conforming mortgage lenders that offer loans above 80 percent loan to value, but without requiring PMI. But that doesn't mean that they don't exist.

If you're looking for a no-PMI lender, look for lenders that will keep the loans on their books. The question to ask is: "Do you keep your loans in your own portfolio?" Right now, I doubt that many lenders do this. They're selling loans to Fannie and Freddie.

When my wife and I got a mortgage in 1999, we applied at a small, local community bank that would allow us to go above 80 percent without paying PMI. (We chose another bank.) With the collapse in commercial real estate, I doubt that many community banks and thrifts are doing these non-PMI loans for residential mortgages right now.

That leaves large credit unions. Some of them retain mortgages in their portfolios, and Navy FCU is one of them. I don't know of any others that do, but that's only because I haven't checked.

April 07, 2010 at 11:42 am


Can you provide references to other no-PMI providers of conforming mortgages that don't require 80% LTV?

April 07, 2010 at 11:40 am

I like this product. For someone with a good salary and credit rating and a conforming mortgage, what is the point of mortgage insurance when a private lender has every right to put the mortgage to the federal government?