Don’t think you can buy a home because you don’t have the money for a down payment? If you meet the qualifying criteria, there are several options that will allow you to get into a home with no money down.
One of the best options is a VA loan. If you’ve served our country in the military, take advantage of the benefits of this loan, you’ve earned it! There typically are lower closing costs, no money down and no mortgage insurance. You’re also likely to get a lower interest rate than with a conventional loan.
Another good loan program is the USDA home loan. This applies to rural properties. There is no down payment required and you are allowed to apply a gift or a grant toward your mortgage. There is a 2.75% fee for mortgage insurance paid up front at closing, which you can finance into the loan. Thereafter you only pay .4% of your principal annually. This rate is lower than other loans, such as the FHA, which charges .85% annually for mortgage insurance if you put less than 5% down on a 30-year loan. Even if you put more than 5% down with an FHA loan, the mortgage insurance rate is dropped to .80%, still higher than the USDA loan. Further, FHA loans require a 3.5% down payment.
A third option is a portfolio loan. This is a great option if you have a tarnished credit history (bankruptcy, low credit score, etc.) or have low cash reserves. These loans are serviced directly by the lender (i.e. local bank) that provided the loan rather than being sold in the secondary market after closing. This affords them the flexibility to give a loan to a higher risk client than the underwriting guidelines for investors in the secondary market would allow for. Due to this flexibility to service higher risk borrowers, the interest rates are likely to be higher. However, if you qualify, you can purchase a home with no money down and have no mortgage insurance to pay.
It’s good to know what your options are. While these are general benefits to the above loans, you will need to speak with a lender to know which ones you qualify for and what specific rates, fees, etc. apply to you. I know of several lenders that can see if you qualify for one of these loan programs or answer any questions you may have. Let me know if you’re interested and I’ll get you connected.