No Down Payment Mortgages: There Are Still Options
If you think buying a home is out of reach, think again. Home loans and programs exist to help lower income folks with buying a home.
Buying a home today is a serious financial commitment. The financial crisis of 2007 was largely a product of the sale of unsecured mortgages by financial institutions and the defaults that occurred. Today major changes to regulations have tightened up credit requirements for mortgages. In most cases a down payment of some kind is required. But if you qualify, there are options and programs that have no down payment options. Here is a brief description of these programs.
In the late 1940's a thankful Nation wanted to reward its brave and victorious military with benefits, the GI Bill. Included in this was a means for veterans to purchase homes with no down payment. Today this system is continued as Veterans Administration Loans. For those qualifying, homes can be bought with low interest rates, guaranteed by the Government and with no down payment. There are qualifications and if you are a veteran this should be your first choice. The VA Loan can be used by reservists, active duty, veterans, and their families.
The program can be used to buy a home, refinance an existing loan or a short sale. The program has benefits that include no money down and low closing costs. Your realtor will gladly assist you with making the right application.
Although many are leaving farm life for city jobs, there are still farms and ranches available and the hardy independent folks are taking on the challenge of rural living. The USDA
has determined that certain areas are good prospects for rural and agricultural development and investment and are offering no down payment loans for purchase of homes with acreage. The goal is to provide low and middle income persons with home ownership in areas which can benefit from more residents who can contribute to local economic growth. The homes bought see developments such as improved plumbing, access for a disabled occupant and access to broadband (service increases as population grows). Qualifications are specified and the program is well worth being investigated.
Most lenders will accept gifts from family or friends that accumulate to a down payment. There are definite conditions for this type of transaction that need to be met. (1) The cash gift has to be documented with an official, signed and dated letter of gift with the amount listed. (2) The gift or combination of gifts must be documented as they are deposited in the borrower's account as proof of their legitimacy and purpose listed. (3) The gift cannot be considered as a loan-in-disguise and expected to be repaid to the giver, but must be an absolute, open and shut documented gift. Up to 6% of the purchase price of a home can be accepted as gifts in lieu of a formal down payment.
There are grants that offer amounts for down payments. The National Homebuyers Fund
offers a program that gives qualifying individuals grants that cover down payments for home loans. The grants are under the NHF's Down Payment Assistant programs active in many states. These grants are non-repayable and cover up to 5% of the loaned amount and can be coordinated with FHA, VA, USDA and conventional/commercial loan programs at a variety of interest and other requirements.
Yes there are no down payment mortgage options; yes there are qualifications.
Yes, as well, there are ways to buy a home and get a no down payment option. There are programs and all having requirements but all are worth investigating and researching. Home ownership is an opportunity to establish financial solid ground and is available to those who pursue it and meet the responsibilities involved. The reward is participation in the American Dream.