What is a Zero Down Payment Mortgage?
A zero down payment mortgage is exactly what it sounds like: a mortgage that requires no money down at closing. Buying a home and putting no money down to do it sounds appealing to many, but in reality, it’s hard to get a zero down payment mortgage in this climate, as banks no longer offer them to most consumers. Hard, however, doesn’t mean impossible. Here’s how you can score a zero down payment mortgage — and the pros and cons of getting one.
Can I Buy a House with No Money Down?
Not everyone will qualify for a zero down payment loan, but in circumstances, you might be able to buy a house with no money down.
If you’re a veteran, you might be able to get a VA loan with no down payment from the U.S. Department of Veterans Affairs (VA). In order to qualify for the loan — you’ll need good credit, enough income and a Certificate of Eligibility from the VA — but if you do, you may be able to enjoy these perks: no down payment on the home (as long as the sales price isn’t higher than the appraised value of the home), no private mortgage insurance premium and limited closing costs.
The second option for a no down payment loan is a USDA loan. The United States Department of Agriculture offers a variety of these loans with low interest rates. Most of the loans are designed to help low- or moderate-income people with decent credit buy a home in a rural area.
Two of the more popular USDA loans are the single-family direct homeownership loan and the single-family guaranteed homeownership loan.
The single-family direct homeownership loan is for low- or very low-income borrowers purchasing homes in rural areas. Eligible properties must be 1800 square feet or less with a market value below the applicable area limit.
To learn more about zero down mortgages process and the home buying process, visit the SCOOP! Blog