The government offers low down payment loan programs and grants to cover down payments, so you may have options for buying a home with no money down.
If you want to buy a home with no money down, you may find it difficult to get money from traditional lenders. Banks and mortgage lenders generally won't finance a home if you don't have a down payment. Most lenders want a down payment of at least 20 percent of the total purchase price of the home you want to buy. However, some federal programs are designed to help you buy a home without a down payment.
Viable options for buying a house without a down payment, or a reduced down paymet, begin with home loans from the the Veterans Administration (VA), the United States Department of Agriculture (USDA) or the Federal Housing Administration (FHA). To qualify for a VA loan, you must have served in the military, or be the widowed spouse of a veteran. For the USDA loan program, which is administered through the FHA, you must meet income guidelines to qualify for down payments as low as 3.5 percent. The FHA also has a first-time homebuyer loan with a down payment requirement of only 3.5 percent. For the most part, you must have a low income and a decent credit history these loan.
Find homes that qualify for an FHA loan program here
To complement these federal loan programs, you may qualify for one of many FHA down payment grant programs that pay a percent or all of your down payment, closing costs or both. Check with your state and local housing authorities for other grant programs that help you make a down payment or pay closing costs. Additionally, some credit unions offer low down payment options on home loans, and you may use grant money to cover the down payment.
While coming up with a down payment may be difficult, having more to put down on your home loan will give you more financing options and a lower monthly payment. When you make a 20 percent down payment, you won't have to buy private mortgage insurance either. You can save a great deal of money by having a lower interest rate and avoiding mortgage insurance.
If you are exploring your financing options and home prices in your area, use Reply! as a resource for free real estate listings and professionals who can help you.