Deciding to buy a home usually requires a lot of saving, and while it’s a natural part of the homebuying process, wouldn’t it be nice if you didn’t have to save as much? With less money to come up with, potential homebuyers could purchase a home faster and start enjoying it sooner. This is a reality for people who opt for a zero-down mortgage.
Zero-down mortgages require no down payment, and many mortgage lenders offer them. Whether it’s a standard bank or a credit union, there are opportunities available, so you should be sure to seek out zero-down mortgage programs that you’re qualified for.
Where you plan to live, if you’ve owned a home in the past, and your current financial status can all play a part in obtaining a zero-down mortgage. If you’re interested in not having to put down thousands of dollars in cash before you own a home, then this may be a good option for you.
Here are a few zero-down-mortgage lenders you may be eligible to apply to:
If you have never owned a home before, you are a first-time homebuyer, and you’ll usually be eligible for a few discounts or offers that other people may not. For instance, there are first-time homebuyer loan options that don’t require any money down when applying for a mortgage. It allows people who are just getting their finances in order to have more homebuying possibilities even when they don’t have large savings to pull from.
First-time homebuyer loan programs were created to give assistance to people who haven’t owned a home before by limiting the amount of cash they need to purchase a home. While it mostly applies to people who have never owned a home before, there are a few ways that others can qualify for this type of loan. You may still qualify if your spouse has owned a home before but you haven’t, you’re currently single but have owned a home with your spouse in the past, or if it’s been three years or more since you last owned a principal residence. If any of these options describe your circumstance, you may be eligible for this type of zero-down mortgage. If not, there are a few other options you can explore.
If you’re looking to purchase a home in a more rural area, you may qualify for a USDA loan. Also known as the US Department of Agriculture mortgage program, this loan is a zero-down-payment mortgage that’s available for eligible rural homebuyers. It was originally designed to “improve the economy and quality of life in rural America,” making it the perfect option for those hoping to escape city life.
There are a couple of USDA home loans that may offer you zero down payment, with the first being the loan USDA loan guarantee. This option guarantees a mortgage issued by a participating local lender.
Some local lenders, such as Solarity Credit Union, offer USDA home loans with reduced rates and the option to roll all closing costs into the total amount of the loan. Note that with zero down payment, you may have to pay a mortgage insurance premium. There is also a direct loan option for low-income applicants with the income threshold varying by region.
The government backs a loan option that may offer a zero-down mortgage option. This loan is called a Federal Housing Administration loan (FHA), and it’s quite popular among homebuyers. An FHA loan is a good option for people who have lower credit scores or aren’t able to pay a down payment on a home because this option has easier requirements than a conventional loan typically does.
FHA loans are especially popular among first-time homebuyers, as more than 83 percent of all FHA loans are used to purchase a first home. While the government is who insures these loans, they are typically administered by a third-party mortgage lender, which means that you can probably find a local lender that offers this option.
Much like USDA loans, FHA loans also typically require an up-front mortgage insurance premium to be paid. This payment is far less than a down payment would be, but it’s still something you may need to save up for. This insurance acts as a safety net for the lender should you default on your payments for any reason.
Along with the up-front cost of an FHA loan, you’ll also have to pay an annual mortgage insurance premium. So, while you save money up front, you may end up paying more throughout the life of your loan. For this reason, many people look into how they can secure a conventional loan with the possibility of a zero-down payment.
With there being so many options for zero-down-mortgage programs, people often forget to consider applying for a conventional loan that also has these terms. Conventional loans are often overlooked because their requirements are seen as being more intense, but some credit unions and banks offer a zero-down option with their conventional loans. While not all conventional loans will offer this benefit, you can increase your chances of being eligible for it by doing a few simple tasks.
Well-qualified borrowers are more likely to have the option of putting zero down on their home loan. To make yourself a more qualified candidate, you should improve each aspect of your finances as much as possible. One way this can be done is by improving your credit score. A high credit score can show financial institutions that you are a trustworthy borrower, that you don’t borrow more than you can pay back, and that you have a good history of making payments on time.
As you can see, there are many zero-down-mortgage lenders, including local lenders like Solarity Credit Union. If you are interested in obtaining a no-down-payment mortgage, you just need to do the research to decide which lender will be best for you and your financial situation.