Finance

Zero down payment options for your next mortgage

As more people discover the benefits of homeownership, it can be discouraging to hear rumors that buying a home requires massive down payments. However, that can’t be further from the truth! There are many mortgage options that don’t require a cent for your down payment. What are your zero down payment options when you start exploring real estate for sale?

Zero Down Payment Loans

To put no money down, you need to qualify for the right loan. Right now, there are two types of loans that allow their borrowers to pay nothing at the closing table.

USDA LOANS

To qualify for a USDA loan, which the US Department of Agriculture funds, you need to meet certain income requirements and buy a rural home. This loan has two options:

  • The Single-Family Direct Homeownership Loan: With this loan, borrowers must meet certain criteria in rural areas such as the home must be a modest home of 1800 square feet or less and the market value should also be below the area’s limit. The best way to find out if the home you want qualifies is to speak to an agent.
  • The single-Family Guaranteed Homeownership Loan: Borrowers with incomes below 115% of the median income of the area can qualify if they buy a modest rural home in the area.

VA Loans

This is a loan option for US veterans. To be eligible, you must have good credit, work full-time, and receive a Certificate of Eligibility from the Department of Veteran Affairs. A huge benefit to a VA loan is these loans don’t require a down payment. There are also no mortgage insurance premiums and the closing costs are limited, making this loan a great financial benefit to military personnel.

Two things to keep in mind with a VA loan, the zero down option is only good if the sales price isn’t higher than the home’s appraised value and there is a VA funding fee of 2.5% that decreases if you pay more than 5% down at closing.

To find some great homes in the Tri Cities area, contact us at Retter & Company Sotheby’s International Realty today!