You may have heard about no money down mortgages a few years ago, and you may have also heard that they were part of the reason for the housing market crash at the start of the great recession in 2008. That is a correct statement, but when used properly, the no money down mortgage can actually be a smart financial tool, particularly for the lending institution. The Veterans Administration has perfected the art of using this type of mortgage to help veterans buy and stay in homes.
This type of loan offered by the VA is almost a novelty in the market any more. Ninety percent of people who use this program actually end up not making a down payment at all on loans worth up to $417,000. While this might sound incredibly risky, it actually translates to a program with the best (meaning lowest) foreclosure rate for any type of home loan over the last several years.
So why would the VA offer this type …