Table of Contents
- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
List Mortgage with No Down Payment
Before you get a mortgage with no down payment, it is critical to make sure you have a good loan officer. Because a loan officer who knows what they are doing can make or break the whole process.
Also, you need to make sure you have a good realtor who has a good understanding of how the lending business works because the lenders and realtors work hand-in-hand.
In this post, we will learn how to get a mortgage with no down payment.
There could be four different ways to get no down payment mortgages
1 - FHA Loan
The first option that you have is an FHA loan. This is a government loan program that is insured by Housing and Urban Development (HUD).
It is one of the most popular programs, especially for first-time homebuyers. It also allows you to be qualified with low credit scores. Some lenders could go all the way down to 580.
The thing about the FHA loan is it does have a 3.5% down payment requirement, however, it will allow you to get the down payment as a gift from a relative. This will ensure that you get the mortgage with no down payment.
You could not only have the down payment as a gift from a relative but also have the seller pay all the closing costs. They will allow the seller to pay the closing costs up to six percent of the purchase price.
2 - VA Loan
If you have been in the military and you are eligible, the VA loan program is hands down one of the best loan programs. VA loan, if you are eligible, allows the borrower to get a hundred percent financing.
100% financing means mortgages with no down payment. Unlike FHA it doesn’t have mortgage insurance which stays with the life of the loan. The VA loan program has a one-time funding fee and that’s it.
The Veterans Administration insures the loan in case of default. VA loan is no mortgage down payment loan which also allows seller concessions up to four percent for the sales price.
VA loan is a little bit more strict on credit and some other things, however, if you fit within a VA loan it is a wonderful loan program.
3 - Conventional Loan
You might have heard of Fannie Mae and Freddie Mac. These are the bodies that insure a conventional loan.
They have down payments of 3% to 5%, however, Like any other loan program, you could get a gift that makes it a mortgage with no down payment. You can also have the seller pay a certain amount of closing costs.
When you are on a 3% or 5% down payment, they will only allow up to 3% for the seller concessions towards the closing costs.
If you go over a 5% down payment then they will allow the seller concessions of up to 6% of the sales price towards the closing cost.
One thing that you want to keep in mind depending on your lender, you can ask the lender to increase your interest rate slightly and then they can pay some of your closing costs.
4 - USDA Loan
The USDA loan is really meant for the rural areas, however, it’s not always the case. Check if the property that you are planning to buy falls in the area which is covered by the USDA loan.
Or you can check which areas are covered under USDA and try to find the property in those specific areas only.
Just like VA loan, if your property falls under the USDA covered area, you can get the benefit of 100% financing making this loan type one of the effective mortgages with no down payment.
One interesting thing about the USDA loan is that you can apply the additional amount of appraised value of the house towards the closing cost.
For example, if you have a purchase contract of $200,000 on a house, and the property gets appraised to $202,000. The additional $2,000 can be used towards your closing costs.
Apart from being a mortgage with no down payment, it also allows up to six percent seller concessions of the sales price towards the closing costs.
Conclusion
These are all great programs. It really comes down to getting the lender who knows what they are doing. It is always about which program is best for you and your situation.
So if you are planning to buy a new home for the first time ensure you ask your loan officer to provide you the benefits of all the above-mentioned loans so that you get a mortgage with no down payment.
