home loans no downpayment

First Time Home Buyer

Home Loans with No Down Payment – Do They Exist?

It’s a fair question. In fact, something like a home loan with no down payment seems too good to be true. 

Many people spend years saving up to buy a home. They cut corners everywhere they can, sometimes saving just a few dollars at a time. For the average person, it takes approximately six and one-half years to save enough money for a 20% down payment while also paying rent. This is because most people spend about 34% of their income on rent alone.

Being able to take out a home loan with no down payment would expedite that timeline significantly – by a lot! This brings us back to our original question – is it possible? Here’s what you need to know. 


Are There Home Loans with No Down Payment?

You may want to sit down for a second. Because what we’re about to tell you is so exciting, it could knock you off your feet! Yes, there are home loans with no down payment! They exist! Hallelujah! 

But, here’s the catch… not everyone can qualify. There are only two types of loans that fall into this category and borrowers need to meet strict requirements for both.


VA Loans

The first type of zero-down loan we’ll discuss is the VA Loan program. VA loans are government-backed loans issued to qualifying military and service members, as well as some surviving spouses. In order to qualify for a VA loan, you’ll need to obtain a Certificate of Eligibility and meet the VA’s Minimum Service Requirements. You’ll also need to prove your financial stability and creditworthiness to your lender. 


USDA Loans

The next type of loan we’ll discuss is a USDA Loan. USDA loans are ensured by the United States Department of Agriculture. This program was created by the federal government to encourage people to move to rural areas. In order to qualify, you’ll need to purchase a home in an eligible area. You’ll also need to meet income restrictions since this loan is meant for individuals with low to moderate-income. Other than that, you’ll have to meet all the usual requirements mandated by your lender, including a satisfactory credit score and debt-to-income ratio.


What About Low-Down Payment Options?

If you don’t think you’ll be able to qualify for the options mentioned above, another route you could go is to pursue a low-down payment loan. Qualifying borrowers can obtain an FHA loan with as little as 3.5% down. You could also apply for a conventional mortgage, knowing that you’ll have to pay PMI if you don’t put down 20%. 

Additionally, your lender may be able to help you look into grants and financial assistance programs. There are lots of great programs out there for restricted income and first-time homebuyers!


Fill Out An Application

Ready to get started? Begin the prequalification process by filling out our easy online application. Or call our office directly to speak to a member of our team.