Getting a Zero Down Home LoanAlthough most banks and mortgage lenders did away with zero down home loans after the predatory lending crisis of the early 2000s, there are still some mortgage programs available that offer approval with no money down. Putting nothing down on a home loan is not necessarily a bad thing. In fact, there can be many instances where it is a great choice. For starters, this opens the door to home ownership to people who may otherwise never be able to purchase a home.
You will find plenty of information that debates the pros and cons of the down payment on a home loan, as well as how much you actually should put down. This is one area where everyone has an opinion, but the only thing that matters is finding what works for you. If you feel like a zero down mortgage is your best option, you have plenty of programs and lending solutions to choose from.
Veterans: VA Loans Offer 100% FinancingVA loans are a great choice for existing and former military members and their surviving spouses. These loans are sponsored by the Department of Veterans Affairs and can allow buyers to purchase without putting any money down. Keep in mind that while the VA program doesn’t have specific credit score requirements, lenders that will be financing the loan usually require scores of at least 620. Some may allow lower scores, though, so this option is worth exploring for veterans seeking mortgages with no money down.
USDA LoansAs part of a movement to boost rural development, the U.S. Department of Agriculture (USDA) created this loan program to assist low- and moderate-income borrowers who want to rehabilitate, relocate, or build a primary residence in rural and suburban areas. There are specific guidelines for these loans, including income limits by county or area. However, these mortgages typically have lower fees than VA loans and lower premiums than FHA loans. Due to income maximums, there is a smaller pool of candidates for this type of loan, but it does offer the zero down payment option.
Credit UnionsOf the lenders that offer their own mortgage programs with no money down, credit unions are among the most popular. These membership-only lending institutions give members a break on mortgage rates and down payment requirements. In most cases, these loans are reserved for members, but there are rare exceptions where a credit union may have mortgage solutions for non-members that offer no money down.
Special Mortgage ProgramsThere are also a number of lending programs designed to help specific types or classes of borrowers find the lending that they need. Doctor loan programs, for example, are designed specifically for doctors and residents who are looking to buy a home before their career completely takes off. These loans are available as early as the fellowship stage, and can offer down payments of 10% or less, with many being approved with no money up front. Keep in mind that credit scores and other finances may play a role in approval here.
These are just a few specific examples of how you can get a loan without a down payment, despite your finances or credit score. There are a number of other solutions, making it easy for anyone to purchase a home even if they don’t have a substantial down payment to offer. Find out which loans you qualify for and how they can help you get into home ownership when you might not have another option.