How to Get a No Down Payment Mortgage – It is possible to purchase a home without making a down payment, and this guide aims to assist you in comprehending the advantages and disadvantages of loans that require no down payment.
Additionally, it provides guidance on how to compare the top lenders offering such mortgages.
Can You Get a No Down Payment Mortgage?
Yes, it is possible to get a no-down-payment mortgage, although it may be more difficult to qualify for one compared to a traditional mortgage that requires a down payment.
Some lenders offer programs that allow borrowers to finance the full purchase price of a home without a down payment, while others offer low down payment options that may require a smaller down payment or no down payment at all.
However, it’s important to carefully consider the pros and cons of these types of mortgages before making a decision, and to work with a trusted lender who can guide you through the process.
If you are seeking a home loan without a down payment, you may find that your options are restricted. Generally, no-down-payment mortgages are offered through government-backed loans or specialized lender programs. However, certain programs may not be available to homebuyers with low credit scores.
What Are the Best No Down Payment Mortgage Lenders?
| LENDER | MIN. DOWN PAYMENT | MIN. CREDIT SCORE |
| AmeriSave
|
3% | 620 |
| PenFed Credit Union
|
0% for VA loan | 620 |
| New American Funding
|
3% | 620 |
| Wells Fargo
|
3% | Not disclosed |
| Guaranteed Rate
|
Not disclosed | Not disclosed |
| Veterans United Home Loans
|
0% for VA loan | 620 |
| Rocket Mortgage
|
3% | 620 |
| Flagstar Bank
|
3.5% | 620 |
| Lower.com
|
3% | 620 |
| Homefinity
|
3% | Not disclosed |
| Navy Federal Credit Union | 0% for VA loan | Not disclosed |
| Chase | 3% | Not disclosed |
| Bank of America
|
3% | Not disclosed |
| U.S. Bank Mortgage
|
0% for VA loan | Not disclosed |
| Alliant Credit Union
|
0% | Not disclosed |
| Truist Bank
|
3% | Not disclosed |
| PNC Bank
|
3% | 620 |
| North American Savings Bank Mortgage
|
3% | 620 |
| Caliber Home Loans | 3% | 700 |
| loanDepot
|
5% | 620 |
Lenders with Zero Down Mortgage Options
Exploring zero-down-payment loan options can be helpful for borrowers who are unable to put savings towards a home but are still eligible for a loan. It’s important to note that conventional loans generally require at least a 3% down payment.
However, there are several zero-down home loan programs available that offer 100% financing for your primary residence. Consider these options when looking for a zero-down-payment mortgage.
Credit Unions
Credit unions may offer zero-down mortgages, but membership is typically required to be eligible. Keep in mind that promotions and offers can change, so it’s important to check with your credit union for the most up-to-date information.
U.S. Department of Agriculture Loans
USDA offers no-down-payment loans to eligible buyers who meet income and location requirements. However, applicants must demonstrate their ability to manage debt and pay bills, and there is no specific credit score requirement for USDA home loan guarantees.
Having a credit score of at least 640 can increase your chances of being approved for a direct home loan from the USDA, although it is still possible to qualify with a lower score. Additionally, USDA direct loans do not require mortgage insurance, while loans guaranteed by the USDA come with an annual guarantee fee.
Department of Veterans Affairs Home Loans
The VA loan program provides veterans and surviving spouses with the option of a no-down-payment loan, and there is no set limit on the loan amount, although there are caps on the amount that the VA will guarantee. To apply, borrowers must provide a Certificate of Eligibility to confirm their eligibility.
While the VA does not impose a minimum credit score requirement, most VA-approved lenders have their own credit score standards. Some borrowers may be required to pay an upfront funding fee, which can be paid in full at closing or financed. VA home loans do not require mortgage insurance.
Doctor Loan Program
Loan programs tailored to physicians, dentists, residents, and fellows are available from certain lenders. These programs often include benefits specifically designed for early-career professionals who may have significant student loan debt.
Some of these programs allow for down payments ranging from 0% to 10%, without the need for private mortgage insurance.
How to Compare No Down Payment Mortgage Lenders
If you’re looking for a no-down-payment mortgage, comparing different lenders is an important step in finding the right loan for you. Here are some factors to consider when comparing no-down-payment mortgage lenders:
- Eligibility Requirements: Different lenders may have different eligibility requirements. Some lenders may require a minimum credit score or a certain debt-to-income ratio, so it’s important to check if you meet their requirements.
- Interest Rates: Interest rates can vary between lenders, so it’s important to compare rates and choose a lender that offers a competitive rate.
- Fees: Some lenders may charge fees for their services, such as application fees, origination fees, or closing costs. Compare the fees charged by different lenders to make sure you’re getting a good deal.
- Loan Terms: The terms of the loan, such as the length of the loan and the type of interest rate (fixed or adjustable), can also vary between lenders. Be sure to compare loan terms to find the best option for you.
- Customer Service: Finally, consider the customer service and reputation of the lender. Look for lenders with good reviews and a track record of excellent customer service.
By considering these factors, you can compare different no-down-payment mortgage lenders and find the best option for your needs.
What Are the Pros and Cons of Zero-Down Mortgages?
Pros:
- No upfront payment: A zero-down mortgage allows you to purchase a home without making a down payment. This can be especially helpful if you don’t have enough money saved for a down payment or if you prefer to use your savings for other expenses.
- Low-cost home ownership: Without a down payment, you can become a homeowner sooner than you might otherwise be able to, and with a lower initial investment.
- Opportunity to invest elsewhere: By not using your savings for a down payment, you can invest that money elsewhere, potentially earning more in returns than you would have by putting it into a down payment.
Cons:
- Higher interest rates: With a zero-down mortgage, you may have to pay a higher interest rate than you would with a traditional mortgage.
- Private mortgage insurance: If you don’t make a down payment, you will likely be required to pay for private mortgage insurance (PMI), which can add a significant amount to your monthly mortgage payment.
- Risk of negative equity: If home prices fall, you could end up owing more on your mortgage than your home is worth. This is known as negative equity, which can be a significant risk with a zero-down mortgage.
- Limited options: Zero-down mortgages are limited to certain loan types and programs, and may not be available for all borrowers.
What Are Available Low Down Payment Mortgage Options?
Good Neighbor Next Door
The Good Neighbor Next Door program by the Department of Housing and Urban Development is open to eligible law enforcement officers, firefighters, emergency medical technicians, and teachers. The program allows these borrowers to buy a HUD-owned single-family home at 50% off the list price.
The program requires a minimum down payment of $100, and the buyer must use the property as their primary residence for at least three years.
Piggyback Loans
When buying a home, a piggyback loan can be taken out in addition to the primary mortgage to cover a portion of the purchase price and reduce the required down payment. This loan can help you avoid private mortgage insurance and keep your loan amount within conforming loan limits, making it easier to qualify for a government-backed loan.
FHA Loans
The Federal Housing Administration (FHA) permits you to make a down payment as low as 3.5%. In comparison to conventional low-down-payment loans, credit score requirements may be more lenient. To qualify for a 3.5% down payment, your FICO score should be at least 580. If your score is between 500 and 579, you’ll need to provide a 10% down payment.
HomeReady by Fannie MAE
A low-income homebuyer can avail of a 3% down payment loan through this program, which is slightly lower compared to the FHA loan’s 3.5% down payment. However, credit score requirements for this program are stricter. To be eligible for a HomeReady loan, a minimum credit score of 620 is required, and those with a score of 680 or higher could receive better pricing.
Freddie Mac Home Possible Loans
The Home Possible program offered by Freddie Mac provides a fixed-rate loan option with a down payment requirement as low as 3%. Borrowers can lower their mortgage insurance once they have 10% equity. To qualify for this program, buyers need a credit score of 620 or higher.
Conventional 97
The Conventional 97 loan from Fannie Mae mandates only a 3% down payment and does not set any income limits. However, borrowers must have a credit score of 620 or higher to qualify for this type of conventional loan.