No Money Down Home Loans

by on September 25, 2012

Increased homeownership encourages responsibility in the citizens, and the federal, state and local governments create programs to promote it. Citizens may want to own their own homes, but the need to have a 20 percent down payment holds them back. The following no down payment mortgage programs were created to make it easier for lenders to accept these people as borrowers so that the dream of homeownership can come true for them.

The Veterans Affairs (VA) Home Loan

The VA has a no down payment mortgage for members of the military. They will need to prove that they have served their country by obtaining the Certificate of Eligibility (COE) for a VA home loan. Future homeowners can then take the COE to lenders offering VA home loans and apply.

This program insures house loans with no money down for members of the military to the amount of $417,000 in most cases. If the house is located in an area where housing prices are significantly higher, applicants may still be able to participate in the program.

The USDA Rural Development Housing Loan

United States Department of Agriculture (USDA) Rural Development Housing loans are for people seeking to purchase a home in particular areas of the country. They are zero down mortgage loans for those who have the capacity to make timely monthly payments on a home loan but are incapable of saving the 3 to 5 percent down payment that is required by lenders.

These zero down home loans do not necessarily require that people purchase their houses in completely rural areas. The qualifying area may be very close to a town, but applicants will need to meet the requirements. For example, lenders will require that applicants have a credit score between 600 and 640 or even higher.

The Navy Federal Credit Union

The Navy Federal Credit Union has zero down home loans for a small portion of the population of this country:

• Members of the military
• Civilians who work for the various military branches or Department of Defense
• Family members of military members

Qualifying applicants can borrow as much as $650,000 for a house without having to save the down payment.

State and Local Programs

All states, counties and cities in the country have various programs that offer residents incentives to purchase a house, and some of these incentives are zero down mortgage loans. If applicants for a home loan fall into the correct category, they can receive help from the state, county or city for their down payments.

An example of a group of people that may be able to find a program for house loans with no money down are those who are buying a house for the first time. People in particular professions can also qualify. For example, teachers or those in the medical profession may be able to receive help with their down payments in these types of programs. If the program for a no down payment mortgage does not completely eliminate the need for a down payment, it may provide a grant that can cover the entire cost.

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Spencer is mortgage insider and expert in home finance.

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