Low-To-No Down Payment Loan Options
Many perspective home buyers think they need a 20% down payment to purchase a house. In fact, almost all credit qualified borrowers can now obtain a mortgage loan with no more than 5% down to purchase a house. And in some cases, the down payment can be zero, such as the no money down USDA and VA loan programs. While the VA loan is just allowed for active military personnel and Veterans, the USDA loan is a fantastic solution, that is available to non-military personnel and Veterans, to purchase a house with limited to no out-of-pocket closing costs.
However, there are times when a USDA loan may not be the best loan solution. This can occur if a property isn't in a designated USDA eligible area, household income exceeds county threshold requirements, the property condition won't meet USDA appraisal guidelines, or the USDA program limits the maximum purchase loan amount in comparison to other loan programs that tolerate a higher debt load.
Should you find a house that you want to make an offer on, but for whatever reasons the transaction doesn’t qualify for USDA loan financing, other alternative financing options are available. This include, for borrowers with a minimum middle credit score of 720, a 3% down loan program with a 2% Lender Paid Down Payment Credit up to $5,000. For instance, if purchasing a $250,000 house, the lender will provide 2% of the purchase price or $5,000 toward your down payment and you will be responsible for 1% of the purchase price or $2,500. The best part, the 2% down payment doesn't ever have to be paid back.
For a summary of your financing options, please reference the following chart:
|Loan Type||Down Payment||Income Restrictions||Max Seller Assist|
|USDA||0||Based on household income*||6%|
|Conventional - w/down payment assistance||3% w/up to 2% down from lender***||Based on borrowers on the loan**||3%|
|Conventional - Reduced Mortgage Insurance||3%||Based on borrowers on the loan**||3%|
|Conventional - Standard||5%||None||3%|
|FHA - Renovation||3.5%||None||6%|
|Conventional - Renovation||5%||None||3%|
*To determine maximum household income limits click here, go to "Single Family Housing Guaranteed", "Income Eligibility", and follow the prompts
**To determine maximum borrower income limits click here and enter the property address
***1% of the purchase price must come from the borrower’s own funds
To learn about all of your No-To-Low Down Payment Loan options please call (866) 552-5912.