Zero down payment loan options
There are a few different paths available to buy a house with no money down, although the income requirements, total debt obligations, and credit score requirements will vary. Let’s look at each one in more detail.
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VA loans
VA loans are offered by the Department of Veterans Affairs and give you the option to buy a house with zero money down. VA loans are available to eligible Veterans and their spouses and do not have a maximum loan amount.
Therefore, if you have a credit score of 620 or higher, a suitable debt-to-income ratio, and can afford the payment, VA loans are available above and beyond the conforming loan limits. Added bonus, VA loans do not require private mortgage insurance (PMI), which can save you money over the life of the loan.
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USDA loans
A USDA loan can be another option to get a mortgage with no money down. USDA loans are offered for home purchases in eligible rural areas and have their own set of requirements for qualification.
For example, buyers must purchase a single-family home that will be their primary residence, meet the income and household income requirements, earn less than 115% of the median income for the area, be within the debt-to-income ratio requirements, and have a credit score above 620.
CCM down payment assistance programs
If you don’t qualify for zero down mortgage loans, there are options available to purchase a home with no money using a down payment assistance program. These programs can help close the gap you need for a suitable down payment and bring you closer to purchasing a home.
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CCM Community Promise
CrossCountry Mortgage offers down payment assistance programs for borrowers who must be residing in an eligible census tract in neighborhoods in select cities.
If a borrower currently resides in an eligible area, they can purchase anywhere in the country. In addition, the CCM Community Promise provides up to $6,500 in down payment assistance to qualifying borrowers.
At least one of the borrowers should be a first-time homebuyer purchasing their primary residence, and a minimum of 3% down payment will be needed. The program is open for eligible census tracts, and there are no income limits to qualify for the CCM Community Promise.
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CCM Smart Start
Another specialized down payment program CCM offers is called CCM Smart Start.
This program aids first-time homebuyers by covering up to $4,000 of their down payment, making it possible for them to acquire their initial home.
Low down payment mortgage options
Aside from zero down mortgage loans and down payment assistance programs, low down payment mortgage options are also available with less restrictive borrower qualification criteria. There are pathways available through Fannie Mae, Freddie Mac, and the FHA.
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Freddie Mac Home Possible Mortgage
Freddie Mac Home Possible® is a special mortgage program that is designed to give borrowers more flexibility and options when it comes to owning a home. The program is designed for low-income borrowers and only requires a minimum of a 3% down payment.
Similar to the other programs we have discussed above, the borrowers must purchase a single-family unit and income restrictions are limited to 80% of the area median income.
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Fannie Mae HomeReady Mortgage
The Fannie Mae HomeReady Mortgage is a low down payment program designed for low-income borrowers. HomeReady is an excellent loan for eligible first-time homebuyers and seasoned homebuyers.
Borrowers will need to have a credit score of 620 or higher to qualify. Competitive pricing options may be available for borrowers with credit scores above 680 or higher.
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FHA loan
Another option to buy a house with a low down payment for both first-time homebuyers and seasoned homeowners is with an FHA Loan. An FHA loan is a government-insured loan where the borrower needs to show a 3.5% down payment to purchase a home.
FHA allows the borrower to obtain a qualified gift for the 3.5% down payment, in addition, the sellers can pay up to 6% of the purchase price toward closing costs, allowing the borrower to make the purchase with no money out of their pocket. Borrowers will need to show a credit score of 580 or higher to qualify for maximum financing. As an alternative, a borrower could have a credit score as low as 500 with a 10% down payment and qualify.
Final thoughts
There are many different mortgage loan options available if you want to buy a house with no money down, but it will largely depend on your personal financial circumstance and the location where you want to purchase.
If you do not want to take out a second loan for your down payment or do not qualify for any government programs, you could consider other financing solutions such as down payment assistance programs like CCM’s Community Promise.
Before making a decision, it is important to consider the various factors and options to make the best choice for your situation. These solutions can provide a way for you to purchase a house with no money down, but they may come with their own set of pros and cons.
Working with an expert mortgage lender like CrossCountry Mortgage ensures that you can explore the different home financing products available and select the best option for you. Whatever option you choose, it is essential to research and consider all options to make the best decision for your situation.
