One major step in becoming a homeowner is the down payment. A down payment is a lump sum calculated as a percentage of a mortgage and is conventionally about 20 percent of the total borrowed amount. If you’re looking at a $500,000 mortgage, that’s $100,000 to have on hand, which can be hard to swing for a lot of people. So, what can you do? Show
Can I buy a house with no money down?For most, the answer is usually no. However, there are some cases where you can buy a home with no money down. Two ways to do it are through Veterans Affairs (VA) loans and USDA loans. These government-backed mortgages can be difficult to qualify for. VA loan qualificationsVA loans are veterans assisted loans backed by the U.S. Department of Veterans Affairs. They’re set aside for those who served or currently serve in the military and their partners. These loans can provide zero percent down payment options for those who qualify. USDA loan qualificationsUSDA loans come with competitive rates for primary residences located in designated rural and suburban areas. In addition to location, the borrower must meet specific financial criteria to be eligible. Although Chase doesn’t offer USDA loans, we can help guide you toward a mortgage that works best for your needs. How do no down payment mortgages work?A government-backed mortgage means the loan is insured by the federal government. So, if a borrower defaults on payments, the lender knows they may be compensated, at least partially, by the government. Low down payment options for first-time homebuyersIf you don’t qualify for a VA or USDA loan, there are potential low down payment options like FHA, Fannie Mae and Freddie Mac backed loans. These loans are common for first-time homebuyers because they may require only three percent of the mortgage as a down payment. These types of loans often come with additional requirements, including mortgage insurance, which can increase total mortgage costs. Homebuyer assistance programsIn addition to low down payment loans, assistance programs and grant options — depending on your personal, financial and geographic qualifications — may also be available. These programs can offer support in the form of down payment and closing costs. Keep in mind these programs vary by state. In summaryBuying a house with no money down is possible but comes with tight restrictions. You may find more availability with a low down payment mortgage and grant options. If you’re a first-time homebuyer, consider speaking with a home lending advisor to find a mortgage that best suits your needs.
Patti McConville/Getty Images Becoming a homeowner doesn’t necessarily require a large down payment; there are options to help you get the keys without giving up every dollar in your savings. Here are three main pathways that might be right for you:
Zero-down mortgage optionsThe easiest way to avoid a down payment is to qualify for one of the two no-down payment government-backed mortgage programs: USDA and VA loans. In addition to government options you may be able to get a zero down loan through your local credit union, especially if it’s one based on membership in a professional organization. These are relatively rare but are worth looking into if you can find one.
The U.S. Department of Agriculture (USDA) backs USDA home loans, a mortgage guarantee program for those buying a home in a designated rural area. USDA loans don’t require a down payment, but borrowers must meet credit and income requirements to qualify, and, in some cases, be a first-time homebuyer. You can verify your eligibility via the USDA website. Although there’s no down payment with a USDA loan, there is an upfront guarantee fee, which borrowers can roll into the cost of the mortgage. While you won’t pay any money initially if you choose to roll it into the loan, keep in mind that it adds to the balance and will accrue interest over the loan term, which means you’ll pay more overall.
If you’re a military servicemember, veteran or surviving spouse, you could be eligible for a VA loan backed by the U.S. Department of Veterans Affairs (VA) with no money down. There is no mortgage insurance with this type of loan, but like a USDA loan, you do have to pay an upfront funding fee, which can be rolled into the mortgage. (Note that you can reduce the funding fee by making a down payment, but no down payment is actually required.) Another perk of VA loans is that many lenders offer more
competitive rates for these products, which helps you save quite a bit of money over the life of the loan. Low-down payment mortgage optionsIf you don’t qualify for one of the no-down payment home loans, you might still be able to buy a home with the next best thing: a low-down payment mortgage. Here are some of the options available:
Pros and cons of a no-down payment mortgageThe ability to buy a home with no or very little money down can be appealing, but there are drawbacks, too. Pros
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FAQs about no or low-down payment mortgagesBottom lineAs home prices rise, hitting that oft-quoted 20 percent down payment is becoming increasingly difficult for many homebuyers. Don’t let the need for a huge sum of money discourage you from trying to own a home. There are a range of programs that can help you buy a home with no money down or just a fraction of the purchase price. Compare all your loan options, and, more importantly, compare multiple lenders. By comparison-shopping for a mortgage, you’ll be able to land the best deal that makes sense with your savings and budget. What credit score is needed to buy a house with no money down?What credit score do I need to buy a house with no money down? No-down-payment lenders usually set 620 as the lowest credit score to buy a house.
Is no down payment for a house possible?There are currently two types of government-sponsored loans that allow you to buy a home without a down payment: VA loans and USDA loans. Each loan has a very specific set of criteria you need to meet in order to qualify for a zero-down mortgage.
How can I buy a house with no money fast?How To Buy a House With No Money Down. Homebuyer Down Payment Assistance. Down payment assistance (DPA) can help you buy a home without immediate cash. ... . USDA Loans With No Money Down. USDA loans have no down payment requirements or credit score minimums. ... . VA Home Loans With No Down Payment.. |