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How to Purchase a Home Without Any Money Down?

Do you want to buy a house, but you do not have the required sum of money to make a down payment? If yes, this write-up is for you. This article is primarily focused on how you can become a homeowner with a zero down mortgage.

A zero-down mortgage is a home loan that doesn’t require a down payment. Most mortgages need you to make a down payment at closing, but you can avoid this if you get a zero-down payment mortgage. For this type, the lender only requires you to pay costs for the house after you might have moved in, including the traditional closing costs, such as attorney fees and taxes. It takes away the stress of having to pay a huge sum of money at the beginning and allows you to pay as you go.


Generally, no-down-payment loans are backed by the Federal Government, which is why the lender is more lenient with down payment requirements. However, other conditions must be met before you can qualify for this offer. Both you and your home must meet the standards to be eligible for a mortgage, and you must meet service requirements for a zero-down payment loan.


The two popular programs, backed by the Federal Government and do not require down payments, are USDA and VA.


The US Department of Veterans Affairs (VA)

For you to qualify for this loan, you must be an active-duty service member of the United States Armed Forces. Here, emphasis is on the amount of time and experience serving the country. Veterans and their spouses can qualify for this offer. Note that the Veteran Affairs (VA) does not set a minimum credit score, but the lenders may require a minimum credit score before it can be approved.


The US Department of Agriculture (USDA)

For you to qualify for a USDA loan, you must have your home in any of the covered locations. There are some financial requirements, like a combined household income that is less than 115% of the median income in the area. Lenders also require a minimum credit score of 640.


Only a few persons fall under the category of those that can qualify for VA and USDA. You may want to consider other alternatives that require a very minimal down payment to qualify. They include:


  • Federal Housing Administration (FHA) Home Loan: Persons with average and high credit scores can be eligible for an FHA loan with as low as a 3.5% down payment. This is significantly less than the down payment requirement for traditional loans.

  • Conventional Home Loan: Conventional home loans like the Fannie Mae or Freddie Mac loan require only a 3% down payment. However, only those with high credit scores will qualify for this offer.

  • Piggyback Loan: A piggyback loan is also known as an 80/10/10 loan. This offer allows you to get two mortgages at a time. The first loan is 80% of the purchase price of the home, and the second is for 10%, which is piggybacking on the first loan. With 90% of the purchase value already covered, you are left with only a 10% down payment. A high credit score is the main requirement for this offer.


Mayer Insurance can help you take out a customized coverage plan for your mortgage. Contact us today to learn more.

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