Saving up for the cost of purchasing a home can feel really overwhelming. Between the cost of a realtor, closing costs, any immediate repairs, movers, and the down payment, you’re looking at spending quite a bit just to get moved in! What if your down payment could be reduced to little to nothing? We’ll introduce to you some zero and low-cost options for down payments when you’re looking to purchase a home! Let’s get started.
Zero Down Payment Mortgage Options for Homebuyers
Did you know that there are two popular, federally-supported ways to buy a home with $0 down? VA loans for military service members and USDA loans both require no down payments.
USDA Loan – No Money Down
The United States Department of Agriculture provides USDA loans, which require $0 in down payment! These types of federal loans usually cost you less in fees and are best for people who want to build or develop. That said, the home you purchase or plan to build must fall within specific qualifications in order for you to be eligible for this type of loan. As a household, your income must not exceed 115% of the United States’ median income, you must have a minimum credit score of 640 or greater, and you cannot have a debt-to-income ratio higher than 45%. Learn more here!
VA Loan – No Money Down
Active duty, National Guardsmen, reserves veterans, and qualifying spouses of deceased veterans can be approved for a VA loan, which requires a zero dollar down payment! To be approved for this type of loan from the Department of Veterans Affairs, one must meet certain service requirements and have a minimum credit score of 580.
Low Down Payment Mortgage Options for Homebuyers
While the options for buying a home with no money down are very slim, there are several different ways to secure a mortgage with a very low down payment! FHA government loans only require a 3.5% down payment, and the credit requirements are lenient and accessible. The Freddie Mac Home Possible® program and the Fannie Mae HomeReady® program both allow homebuyers to put just 3% down on their new home and pay lower monthly mortgage payments!
FHA Loans – 3.5% Down Payment
The US Federal Housing Administration backs loans that allow homebuyers to put just 3.5% down. This type of loan is for citizens who fall into low and moderate income categories, and they have lower qualification standards than VA and USDA loans do. This type of loan only requires a credit score of 580 or higher. If your credit is lower than that, don’t worry. You can still qualify, you just may have to pay a bit more towards your down payment.
Fannie Mae and Freddie Mac – Low Down Payment Loans
The United States Congress created Fannie Mae and Freddie Mac – these are federal mortgage companies that operate through lenders in the mortgage market. Fannie Mae has a program called HomeReady® and Freddie Mac has a program called Home Possible®. Both of these programs are for low and moderate income families and individuals who don’t earn more than 80% of the United States’ median income. Both of these programs only require a 3% down payment from homebuyers!
Now you know about the amazing opportunities out there for saving money on your down payment when purchasing a new home! If you have questions or would like assistance finding that dream house, give Edge Realty a call! We’re happy to help. You can contact us here.