5 Mortgages that Require No or Low-Down Payments
You don’t need to put 20% down in today’s housing market to become a home buyer. Believe it or not, there are mortgages that require very little or no down payment at all. So, if you are in the market to buy a home with little or nothing down, you can with these 5 mortgage options.
NO DOWN PAYMENT: VA Loan
The VA Loan offers mortgages with no down payment for qualified veterans, active-duty service members and certain members of the National Guard and Reserves, as well as military surviving spouses. Guaranteed by the U.S. Department of Veteran Affairs, VA loans are similar to FHA loans in that the agency guarantees repayment to lenders.
NO DOWN PAYMENT: USDA Loan
The U.S. Department of Agriculture offers 100% financing with USDA loans, once known as rural housing loans but available to buyers in suburban areas as well. The goal is to reach “low-to-moderate income homebuyers” in eligible areas. The USDA program also has restrictions on household income and is intended for first-time homebuyers, although there are some exceptions.
LOW-DOWN PAYMENT: FHA Loan
With a minimum of 3.5% down, the FHA loan is a great low-down payment option for borrowers who may have less than perfect credit since FHA guidelines are more liberal with credit scores and income requirements. The Federal Housing Administration does insure the loan which is provided by an FHA-approved lender. Borrowers will pay an upfront mortgage insurance premium with a payment less than 20 percent.
LOW-DOWN PAYMENT: The HomeReady Mortgage
Backed by Fannie Mae, HomeReady loans offer low to moderate income borrowers with good credit a chance to purchase with as little as 3% down. Unlike government-insured loans, with HomeReady, borrowers may have the option to cancel their mortgage insurance once their home equity reaches 20%, and cash for down-payment and closing costs can come from multiple sources.
LOW-DOWN PAYMENT: Conventional 97 Program
The Conventional 97 loan program is available from Fannie Mae and Freddie Mac and offers borrowers 3 percent down payment options in which the entire amount can come from gift funds, so long as the gifter is related by blood or marriage, legal guardianship, domestic partnership, or fiancé/fiancée. There are loan limits, the subject property must be a single-unit dwelling and the mortgage must be a fixed-rate.
If you don’t know which mortgage is right for you, that’s okay. A mortgage lender can help answer your questions and qualify you for the right loan. Let us help get you moving toward home ownership today!