4 Options for Buyers Who Want a No (or Little) Money Down Mortgage
Buying
While it used to be impossible to purchase a home with little or no money down, the times are changing.
Today, several popular loans allow home-buyers to secure the home of their dreams without putting the standard 20% into a down payment.
Some of these loan options offer a no money down mortgage, while others make the down payment amount as little as 2-3%.
To find out if one of these loans is right for you, read on:
4 Smart Options for a No Money Down Mortgage
From VA loans to USDA programs, these four loan options make it easy to purchase a home:
1. FHA loans
The Federal Housing Administration (FHA) provides a unique series of loans for qualified borrowers that allow for down payments as small as 3%. While the mortgage insurance associated with these loans can be expensive, this is an attractive option for would-be homeowners who find the prospect of scraping together 20% for a down payment daunting.
2. The USDA Rural Development Program
If you’re looking for a smart, savvy loan program that allows for a small down payment (often in the neighborhood of 2%), look no further than the USDA’s Rural Development Program.
This program, which is in such wide demand that it often runs out of money before the fiscal year comes to a close, allows buyers in some regions of the country (these aren’t always as rural as you may think) to purchase property or a home.
While these loans are guaranteed by the USDA, they come directly from a bank and do not include mortgage insurance.
3. VA loans for qualified veterans and service members
If you’re a veteran or a current service member, you may be eligible for a VA loan. The VA guarantees these loans, although they’re issued by private banks. These loans do not include mortgage insurance and allow qualified borrowers to purchase a home with no down payment. Funding fees are often as low as 1.25%, and these loans are a fantastic way for current and previous servicemen and women and their families to secure the dream of home ownership.
4. Private mortgage insurance
While it’s not right for every borrower, taking out private mortgage insurance can be an effective way to secure a small down payment. While every financial institution differs, most banks will offer the option of down payments of about 3% as long as the borrower takes out a private mortgage insurance policy.
These insurance policies can be expensive, and interested buyers will need to understand the pros and cons fully before making the leap.
A No Money Down Mortgage is Within Reach
If you’ve ever dreamed of a no money down mortgage, these four options may be right for you. From programs funded by the USDA to loans issued by the VA, there are dozens of options for people who want no money down mortgages to obtain the dream of home-ownership.
