Many people are looking to buy a home, but they are having trouble coming up with a large down payment to help them get their foot into the door of homeownership. The mortgage meltdown has made it harder for potential homeowners to find funding for a home without a large down payment, but it is still possible for a qualified buyer to obtain a mortgage for a home with little to no money down. Here are some routes that are available for buying a home with a small down payment or no money down.
FHA Mortgage Loans
One of the first places that a potential homeowner should look for a mortgage is the Federal Housing Administration. The requirement for a down payment can be as little as 3.5% of the purchase price of the home, which is much less than the 10% to 20% required by many private lenders. The credit requirements and mortgage rates are generally more attractive as well, making this a great place to start shopping for a mortgage loan. One thing to be aware of is that the fees required for this type of loan can really add up quickly, so examine all of the options available to you before making your choice.
VA Mortgage Loans
If you are a qualifying veteran, you may be able to get an attractive mortgage deal from the Department of Veterans Affairs. This department is dedicated to helping veterans and military personnel navigate through the home-buying process and provide mortgage terms that civilians are unable to get. These loans are one of the few ways left to obtain a mortgage with no money down and are available to all active-duty and honorably discharged members of the armed forces, including members of the National Guard or Reserve, the Coast Guard, and surviving spouses of service members killed in the line of duty.
Navy Federal Credit Union Mortgage Loans
The Navy Federal Credit Union is another option for people to obtain a home loan with little to no money down. It is an actual credit union, but its membership is limited to active-duty or retired members of the armed forces, enlistees and officer candidates, and civilian employees or contractors working for the Department of Defense or at DOD installations. Any family member or household member of a qualifying person will also be eligible for membership. To obtain a mortgage loan, you must first become a member through the credit union’s offices in the Washington DC areas or its branches at military posts throughout the country.
USDA Mortgage Loans
If you are considering purchasing a home in a rural area, you may want to consider seeking a USDA mortgage loan. The loans are available through the U.S. Department of Agriculture’s Office of Rural Development and are available to people with low- to moderate incomes. The maximum loan amount is generally lower than the amount for FHA or VA mortgages, but is more than adequate for buying a starter home in a rural community. There is a waiting list to be accepted, so the sooner you apply, the faster you can get to the top of the list.