Buying a Home With No Money Down
Allow yourself to get financing with zero money down and make your homeownership dream a reality.
One of the biggest barriers to homeownership is not having enough cash to put down on a house at closing. While you might think you will not be able to buy a home if your savings account is looking a bit lean, there are some creative loan opportunities where you can make it work.
Today we are talking about two specific loan programs that would allow you to get financing with zero money down and make your homeownership dream a reality.
One of the biggest issues that we see as being a hurdle for people jumping into homeownership is the myth that you still must have a big old twenty percent down payment for the house you want to buy. Well, the beautiful thing about today's real estate market is there are several different loan options available. Whether you are a first-time home buyer, or you have owned your house for fifty plus years. There are several different tools that you can use to actually lower your out of pocket costs upfront.
Yes, there are some low-down payment loan options, but let us specifically talk about the zero down payment options. With so many different loan options available on the market, it is hard to know the details of which zero down payment loan is best for you and your situation. Most of us just think about the usual three or four loans that are the most used like conventional loans, FHA loans, or fixed rate home loans.
One zero down payment loan option is a VA loan. It is a government back loan by the United States Department of Veteran Affairs. VA loans provide flexible, low-interest mortgages for members of the U.S. military (active duty and veterans) and their families. VA loans do not require a down payment or PMI, and closing costs are generally capped and may be paid by the seller, which help you save even more money. However, a funding fee is charged on VA loans as a percentage of the loan amount to help offset the program's cost to taxpayers. This fee, as well as other closing costs, can be rolled into most VA loans or paid upfront at closing. A big plus for VA loan eligibility is that there is no income limitation. You can make one million dollars per year and still qualify for a VA loan.
Some of the pros of doing a VA loan besides the zero down payment option are:
It helps you finance a home when you do not qualify for a conventional loan.
Credit requirements are typically more relaxed.
You do not need a large down payment.
This type of loan is open to repeat and first-time buyers
Some cons of a VA loan that you need to consider are:
Expect to pay mandatory mortgage insurance premiums that cannot be canceled on some loans.
You will have higher overall borrowing costs.
Expect to provide more documentation to prove eligibility.
The second zero down payment home loan option is the rural development loan, which is a great loan if you qualify for it. First time home buyers are a great fit for this loan to make their homeownership dream come true. The rural development loan is another government-based loan by the United Stated Department of Agriculture. This USDA loan was created to help moderate- to low-income borrowers buy homes in rural areas. You must purchase a home in a USDA-eligible area and meet certain income limits to qualify. Rural Development loans do have an up-front guarantee fee equal to 1% of the loan amount and 0.35% annually. The up-front fee is cheaper in most cases that up-front fees for the VA loan. The annual fee is more than borrowers pay with the VA loan, but the VA loan does not have an annual fee.
The only setback of the rural area requirements is that it is not available for anyone living inside the city limits of Jonesboro, Arkansas. If you live anywhere else in Northeast Arkansas, you are going to qualify for it because it is mostly based on the population. The same pros and cons that are for the VA loan also are true for the rural development loans as well.
However, there are some different eligibility requirements like having a credit score of 640 or higher, at least two years of employment, having dependable income, and mush be a United States Citizen. One last concern with a rural development loan is if you have a high-paying job or a two-income family, you may not qualify for the loan.
Conclusion
Of course, with any of these loans, home loans are not a one size fits all solution. For the two zero down payment home loan options that we discussed (VA loan and rural development), there's actually several other unique, special situations that may be based on your occupation or the specific area inside of your city that you're looking to live.
What we really encourage people to do when they are starting this process of purchasing a home is to pick up a phone and give us a call so for us to have a conversation. We really see ourselves as the quarterbacks of your home buying process. We want to make sure that you are getting where you need to go for the next steps and being put in the hands of the right people who are able to take care of you in your specific situation.
At the end of the day, it is just a matter of us having that conversation to figure out what your goals are and working together to achieve them. If you are in the market as first-time home buyer or looking to change into a more suitable home, then let us discuss how we can make your next or new home fit your lifestyle. Give us a call at (870) 273 0633 or send us a message here at our website.