Mortgage Program With No Down Payment

Merrill Lynch Credit Corp. has introduced a no-down-payment mortgage program for would-be homeowners who have the income to qualify for a mortgage but lack the down payment.

The Parent Program is starting in California and will be introduced in Connecticut, New Jersey, New York, Pennsylvania and Florida next month. The company hopes to offer the mortgages in at least 30 states by the end of the year.

The no-down loans are available only through Merrill Lynch's PrimeFirst mortgage, which offers first mortgage financing of $100,000 or more with interest rates ranging from the prime rate minus 1/4 percent to the prime plus 1/2 percent.

Under the program, qualifying home buyers can borrow 100 percent of the purchase price up to $2 million but need a sponsor to guarantee the amount usually required for a down payment. The sponsor, however, does not actually advance any money.

The borrower's only out-of-pocket expenses would be the normal closing costs.

Homeowners need not be first-time homebuyers and aren't required to carry mortgage insurance, just standard homeowner's coverage, Johnston said.

In the event of a default, sponsors are not liable for any costs beyond the amount they guaranteed, he said.