Can you buy a home with $0 down?

no money downAnyone interested in buying a home should be familiar with one particular rite of passage: the down payment. Generally speaking, the more money you have to put down, the better your chances are of purchasing a mortgage.

Contrary to popular belief,  a large down payment - traditionally speaking, 20 percent of the home's purchase price - isn't necessary to buy a home. In fact, there are several options that make it possible to buy a home with zero (or little money) down.

So if you don't have a large down payment saved up, keep reading to learn more about low down payment programs that could help make your homeownership dreams come true.

Option #1: FHA Loan

Are you having a hard time coming up with a large down payment for your first home or just don’t want use all of your savings? Then you might want to consider a low down payment mortgage backed by the FHA.

Designed mainly for first-time home buyers, FHA loans offer comparatively easy credit qualifications, low closing costs, and low down payments, according to HUD.  Typically, FHA loans only require a 3.5 percent down payment. And many times you can get the seller to contribute towards your closing costs.

Recently, some lenders have relaxed their credit score requirements, approving FHA mortgages for home buyers with scores below 600.

Another advantage is its less strict guidelines on the home buyer's debt-to-income ratio, defined by HUD as "a comparison or ratio of gross income (before taxes) to housing and non-housing expenses. FHA is more flexible with the debt-to-income ratio. Generally speaking, applicants for an FHA loan should not have a mortgage payment and non-housing debts that exceed 41 percent of their gross income, notes HUD.

But for the FHA to be more forgiving in that regard, applicants typically must have strong compensating factors, including steady income and cash reserves after the loan purchase, according to Bates.

The major drawbacks of the FHA loan program are the requisite upfront mortgage insurance premium and monthly mortgage insurance payments that last the life of the loan.

Option #2: VA Loan

People with military backgrounds who are in the market for a new home could meet their down payment needs with the loan program sponsored by the U.S. Department of Veterans Affairs (VA). A VA Loan offers plenty of perks - most notably, ZERO down payment.

The VA loan program says homebuyers must be active service members, veterans, and eligible surviving spouses whose husbands or wives passed away due to service-related injuries.

A VA loan is appealing because it doesn't require mortgage insurance, and has lower interest rates compared to FHA and conventional loans.

Option #3: Down Payment Assistance Programs

If you can't rely on parents or relatives for help with your down payment, where else can you turn?

The answer might be found in down payment assistance programs. Down payment assistance programs usually have low down payment requirements, but in order to be approved, you will need to meet certain guidelines in regards to your income and credit.

He notes that down payment assistance programs generally are funded by state and county agencies, so he advises people to check with housing agencies in areas where they want to purchase a home.


If you think that one of these programs may be a good fit for you, please give me a call directly and we can see if the time is right for you to purchase a home.

Thanks for reading…Steve Jackson


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