It is such a sad occurrence you failed to secure your dream house because you lacked the necessary funds to make any down payment and reserve that property. You feel depressed, angry, and even irritated your savings didn’t make the cut to buy you that much-coveted residential unit. You also begin to question the integrity of your lenders – without having any intention to – because you feel cheated from owning a wonderful property that you waited for a long time.
However, there are ways you can still grab the opportunity to purchase a house without paying any down payments. It might be tricky to pull this one off since lenders are not open to this idea. Don’t fret just yet. This article will show you a tip or two on how to acquire a house with no down payments made initially.
No Money, No Problem
The only two requirements for you to be granted a no down payment plan is if you’re a USDA (United States Department of Agriculture) loan or VA (Veterans of America) loan applicant. If you aren’t one, you’re in tough luck but never think for a moment that it’s impossible to buy a house with no down payment. It’s still all about mortgage loans we are dealing here with emphasis on what to pay and how to pay it.
The following are sources of no down payment means to help you get started in purchasing your dream house:
a. Down payment gifts – a few mortgage loans permit the gift of down payment. This gift can come from family or friends.
b. DPA programs – down payment assistance schemes can assist you with up to 100% of your down payment.
c. Request seller to settle closing assets – closing costs are expenses charged by lenders upon issuance and execution of your mortgage loan. These costs are between 2% and 5% of the total loan value.
The aim here is to help you qualify for a home loan with bad credit and make you credible to your lenders.
There are also two types of no down payment loans available. These are the following:
A. Zero Down Payment Home Loans
• USDA Loans (no money down) – this type of loan carries a zero down payment plan. They likewise carry the lowest mortgage premium compared to other mortgage types. The requirements are you should have at least a minimum score of 620 points, you have to be 100% finance (lack funds upon applying for the mortgage loan), you should meet the 50% maximum DTI (debt-to-income) ratio, and you must be in a USDA-approved rural place.
• VA Loans (no money down) – this type of loan provides 100% funding to military veterans. A VA doesn’t require any mortgage insurance but charges a one-time fee called VA funding fee which is 2.5% of the loanable amount. To avail of this, you should have a credit score of 580 and above, you have to be funded 100%, you should also meet the 50% DTI ratio similar to USDA loans.
• GNND (Good Neighbour Next Door) Program – this is a government-supported loan scheme offering HUD homes for only 50% off with a small amount (USD100.00) for a down payment. You have to be any of these: police officers, firefighters, teachers, and emergency medical technicians to avail of this plan.
B. Low Down Payment Home Loans
• FHA Loans – this loan type only requires a 3.5% down payment if you have a minimum of 580 credit score points and a 10% down payment if your credit score hits 500 points. This loan variation allows 100% of down payment to be gifted either from a family or a friend.
• Home Possible and HomeReady Homes – this loan type only requires a 3% down payment. You should have at least 620 credit points to be eligible. Gifted down payments are allowed.
• Conventional 97 Loans – this loan type, similar to the above, also requires only a 3% down payment and you should have at least 680 credit score points to qualify. Gifted down payments are also permitted.
• Piggyback Loans – this loan type is special as it is applicable only if you have two loans. The 80/10/10 mark is indicative of this. You should have a credit score of 680+ to avail of this plan and a portion of this can be gifted. You can learn more about this by visiting this site.
There are a number of pros and cons to consider before deciding to purchase your house without settling any down payments. It is best if you do diligent research on this initially or talk to a licensed mortgaged advisor. They will assist you with your financial concerns and provide unbiased answers regarding your home loan questions .
Buying a house with no down payment is possible even if you’re not a USDA loan or VA loan applicant. There are methods to acquire 100% no down payment either through gifting or belonging to any two of the major classifications – zero down payment and low down payment – to be eligible. Do your research diligently if you want to continue pursuing this deal. Better yet, talk to a professional mortgage advisor and be guided properly. Owning the house you’ve been targeting for years is easy if you know what strategy to use.
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