Low or no mortgage down payment loans

There are still a few ways to get a mortgage without a down payment. Low down payment loans like FHA loans are available for qualified buyers but there are two ways to buy a home with zero down.

VA Loans

Veterans and current members of the military may qualify for 100% mortgage financing. The loans are even available to surviving spouses provided they have not remarried. The loans are granted by private lenders but are supported by a guaranty by the Department of Veterans Affairs. The amount of the guaranty is dependent on several factors such as whether you have used the entitlement before or whether you wish to buy a home in a high-cost area.

Although VA loans require that you pay a funding fee (typically 2.15 percent of the loan), this fee can be rolled up into the cost of the loan. The funding fee is waived for borrowers with a service-related disability. However, veterans and active duty personnel who have used their entitlement for a previous loan may be required to make a down payment on a new loan.

USDA Loans

Home buyers in certain designated suburban and rural areas can access two types of loans from the US Department of Agriculture: direct loans and guaranteed loans. USDA loans are income-limited, meaning your household income cannot exceed allowable limits for the area in which you want to buy a home.

The USDA maintains a map of the country that you may search to determine if the home you are looking to buy lies in a designated area for loan eligibility.

Restrictions Apply

As with any mortgage loan, even zero down payment loans require buyers to meet lender qualifications. Despite the guarantees on offer, borrowers will have to demonstrate their ability to repay the zero down payment loans and meet certain minimum credit score requirements. You will be required to show you have two open lines of credit with restrictions on the number of late payments in the last 12 months, and for USDA loans in particular, you may be allowed to use non-traditional sources of credit such as rental history or utility payments.

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