For most people, the standard 20% down payment for home loans can be a lot to handle. It’s a standard to have that certain amount for a mortgage down payment. And because it’s quite hard for others, some aspiring home owners begin to look for other options.
The struggle is even harder for young professionals, first-time home buyers, and low-income families. Because of this, many decide to forgo their plans of getting a house they can call their own.
But hope is not entirely lost. Other than seeking assistance, there are several other options for home buyers seeking a home they could buy with a low down payment.
Although each low or no down payment mortgages have their own specific qualifications, they are worth looking into. In the end, you might find a home loan that works perfectly for you and your situation. Here are some of those home loans:
FHA Home Loans
Perhaps one of the most popular low down payment mortgage option in the market today is a government backed mortgage called the FHA Home Loan.
Under the Federal Housing Administration, the lowest possible down payment you can score from an FHA loan is 3.5%. These are for applicants with at least a 580 credit score. Anything lower than that would require 10%.
Keep in mind that FHA home loans are not restricted to first-time and low-income home buyers. As long as you qualify, anyone can apply.See if you qualify for a low down payment mortgage here.
USDA Home Loans
Among the few that offers 100% financing or zero down home loan option is the USDA home loans. It’s also known as the Rural Housing Loan.
In order to qualify, home buyers should choose a property that’s within USDA-approved locations. These are generally suburban and rural areas.
Borrowers can check if the property’s location is eligible. And as far as eligibility is concerned, it’s important to note that about 97% of the country’s land mass is considered eligible.
Another qualification lies in the borrower’s income. Income limits under the USDA should not be more than 115% of the area’s median income.
It’s also worth knowing that home loans under the USDA have some of the lowest interest rates in the market. Since the United States Department of Agriculture (USDA) backs the mortgage, lenders can give lower interest rates.
VA Home Loans
Another zero down payment mortgage comes in the form of the VA home loan. However, this mortgage option is only for eligible borrowers.
Since this loan is financed under the Department of Veteran Affairs, those qualified have to be current and former military members and servicemen.
There is a certain minimum duration for a borrower under the VA to be considered eligible. Typically, borrowers on active duty should at least be in service for 90 days.
For those who are already separated from service, the borrower should at least served two years of active duty. And as for Reserves or National Guards, they are considered eligible after six years of service.
Home Ready Loans
HomeReady Mortgages is a conventional mortgage option from Fannie Mae. Qualified borrowers would only need to put down 3% of the loan amount.
However, HomeReady has an income limit of equal or less than the median income of where the property is located. Also, borrowers should go through Homeownership education.
Other than these home loans, there could be some options in the market that require little or zero down payment. What’s important is you should go for a mortgage that would work perfectly for you.
Most mortgages vary by lender guidelines, therefore it also pays to shop around different lenders so that you will have more options to choose from.The road to your new home begins with this step.