5 No Money Down Home Loans

NO Down Payment Loans To Buy a House

Yes, there are some No Down Payment options to purchase a home.

Keep in mind a down payment is not the same thing as closing costs and prepaids. You may not need a down payment, but someone has to pay the closing costs and prepaids at the time you close on the loan.

"Closing costs" are things it takes to close or settle on a home, such as appraisal and credit report fees, attorney fees, lender fees, title searches, surveys, the setup of your escrow account, and on and on. If the seller of the house you are buying or the lender have not agreed to pay these costs, it will be up to you, the buyer, to pay them.

If the seller agrees to cover your closing costs and/or prepaids, they may raise the price of the house by the same amount. If the lender agrees to pay your closing costs and/or prepaids, they are raising your interest rate to do it. Both of these options can wind up costing you a lot over time. Just saying: If you haven’t even saved enough to cover your closing costs, you may not be ready for homeownership.

Many markets right now are "seller's markets", and the seller will not pay your costs to buy the house. So having that additional amount saved is important in case the house you want badly is one where the seller won't help out on closing. If you are making a full-price offer (meaning you are offering the list price of the home), I would always ask the seller to pay all the closing costs. If they say no, you can decide if you want the house that much that you will pay your own closing costs.

Now, for the NO DOWN PAYMENT home loan options:

1) VA Home Loans

The first one is a VA loan. Eligible people include:

· Current or former active-duty service members
· Are or were a Reservist or National Guard who has drilled for 6 or more years OR has been deployed to a war zone for at least 90 days
· Surviving spouses receiving Dependency Indemnity Compensation (DIC) from the VA
· Employees of NOAA and the uniformed Public Health Service
· Graduates of these military service academies:

West Point
Naval Academy in Annapolis, MD
Air Force Academy in Colorado Springs, CO
Coast Guard Academy in New London, Connecticut, AND
The newest eligible people are members of the Space Force

This is not all the people that are eligible, just the most common.

First, go to VA.gov to see if you can get your Certificate of Eligibility (COE) for a home loan instantly. Many people can. Remember, only those sites that end in dot gov are official sites of the US government. Any other site ending/extension is a private company that may want you to think you are on a VA site.

Here's the official link:

Apply For Certificate Of Eligibility | Veterans Affairs (va.gov)

If you received your COE instantly, great! Be sure to read the conditions at the bottom and make sure you have “full entitlement”. If you have used your entitlement previously, you may not have full entitlement available. Learn more about “less than full entitlement” here.

If you did not get your COE instantly, you can apply for one right then online or you can let your lender get it when you apply for your loan. If you have doubts about whether you are eligible or whether you have full entitlement, I suggest getting the COE early to verify whether you will need a down payment or not.

2) USDA Home Loans

A second major type of No Down Payment Loans is USDA loans. The USDA is the United States Department of Agriculture, so these are loans to help people living in rural areas buy a home. The property you are buying must be in certain counties designated as rural AND your income must be below a certain amount. USDA home loans are not for livestock, barns, and other types of commercial uses, a home and the land it sits on only. Here is a link to see what counties are considered rural and USDA loans are available there:

https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp

3) An FHA loan or conventional loan combined with down payment assistance

Down payment assistance is typically only for first-time homebuyers, which includes people who have not owned a home in the last 3 years. You can Google what is available in your state (these always have various restrictions and requirements – make sure you understand them clearly!) or, if you have already contacted a realtor, any realtor worth their salt will know what is available in your area. Be aware you can use these with VA and USDA loans to reduce your monthly payment. Some of these will require no monthly payment but must be paid off when you sell the house.

4) A HUD foreclosure ($100 down payment)

You can contact a realtor about buying a HUD foreclosure for $100 down and see if there are any properties you like in the area you are interested in. You can look online, but all the websites that carry these properties want your email so they can send you marketing emails, at a minimum. Some want to charge you to provide the listings. Your realtor can get them for free, or here is FHA’s free link: HUD Homes for Sale | Search HUD Homes Listings | Bid on HUD Homes (hudhomestore.gov)

5) Loans for Doctors/Physicians

There are some programs for medical residents, practicing physicians, or fellows that do not require a down payment. The thinking is that these individuals have excellent future earning potential and therefore are not likely to default on the loan. Good credit only…student loans must be in repayment status (not deferred).

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