To say that buying a home has gotten tougher in the past few years would be a vast understatement. Lenders are casting a more critical eye on appraisals, credit reports and income calculations. To make matters worse, most lenders require at least 5% of the home’s purchase price as a down payment. However, there are still a couple of programs that offer financing with no money down.
The Veterans Administration (VA) authorizes lenders to offer VA Mortgages to qualifying veterans and active duty personnel. The loan was first offered in 1944 as a benefit to soldiers returning home from World War II. This loan is offered to a wide range of people who have served during peace time and war time as well as to people that have served in the various reserves.
The main attraction of the loan is the absence of any down payment requirement. Other benefits include attractive interest rates, fixed rate loans, and no mortgage insurance.
USDA Home Loan
This is another program authorized by a government agency. The United States Department of Agriculture offers the USDA Home Loan to qualified applicants. Typically, borrowers must have a credit score of at least 620 in order to get approved for the loan. There are rules that limit a person’s total household income. Finally, the property being purchased must be in an area that is labeled rural by the USDA.
The beauty of this loan is the ability to borrow up to 100% of the home’s market value to cover not only the loan but also closing costs associated with the mortgage.
Getting approved for one of these loans is usually easier than getting approved for a conventional loan. The rates will be very comparable and you won’t have to come up with a large down payment in order to get approved for the financing.