When you get a mortgage, you generally have to make a down payment. This allows your lender to trust that you will pay your bills in the future. Down payments can be tens of thousands of dollars, and some people spend decades to save up and get their first home.
But did you know that some mortgages don’t require you to make a down payment? These are called zero-down mortgages, and they are almost always backed by the government. The government offers these loans for people who need financial assistance.
What are your options?
The government offers these loans to encourage people to move to rural areas. USDA loans can be as low as $0 down and has low fees. To qualify, you must be moving to a rural area and be using your property as your primary residence, not a farm.
These loans are backed by the Department of Veteran Affairs and require $0 down. To qualify, you need to have a credit score of at least 640 and qualify as one of the following:
Other Useful Mortgages
- Served 90 consecutive days of active service during wartime
- Served 181 consecutive days of active service during peacetime
- Served for more than 6 years in the National Guard or Reserves
- Be the spouse of a service member who died in the line of duty or from a service-related disability
Though they aren’t zero-down, conventional loans can have a down payment as low as 3%, depending on your lender. Canceling private mortgage insurance whenever possible is good for keeping your payment low. There are conventional loans designed for people who need financial assistance, such as Freddie Mac’s Homepossible. However, you will be required to have a certain income and credit score to qualify.
Backed by the Federal Housing Administration, these loans are designed for those with low incomes and can have a down payment as low as 3.5%. This option is good for people with a bad credit score. Though they have less requirements than USDA and VA loans, you will need to pay mortgage insurance if your down payment is lower than 10%.
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