How To Buy A House With No Money Down

Entering into a mortgage agreement to buy a new house, holds some risks for both the entity providing the financing and the buyer who is applying for the financial assistance. This is why the financing agent will, in most cases, request that the buyer provides a down payment on the mortgage prior to entering into any type of agreement. For many people, especially those who are planning to buy their very first property, coming up with such a substantial amount of money can be very tough.

Fortunately, there is a small number of options that can be utilized when a down payment is not available. While not everyone will qualify for options that allow you to buy a house with no money down, it is still worth considering these options and seeing whether you might meet the criteria of an option listed.

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In this post, we’ll take a look at some of the best ways that you could possibly proceed to buy a house when you do not have funds available for a deposit.

VA Mortgage Loans

One of the most popular options that are currently available is VA Loans, which is offered to only a selected number of people in the country. The good thing about VA Loans is that you are able to get a mortgage loan that covers 100% of the money that is needed to buy the house – this, in turn, means there is no need to make any type of deposit or down payment.

This option is only available to Veterans. You will need to be an active Veteran serving your country, or you would need to be a discharged Veteran. If you were previously discharged, it should be noted that if you were discharged for dishonorable actions, then you will not qualify for this type of loan.

With VA Loans, you will likely be charged a VA funding fee, which is a fee added to the total value of the loan. In most cases, the fee will be equal to 2.15% of the total amount that you are applying for. While the VA funding fee can be offered as a down payment, you are also able to get the amount financed, which will then be added to the total amount that you are applying for.

Lenders offering VA Loans tend to have their own set criteria for qualifying. In many cases, your credit score will need to be at least 620 or higher in order to be approved for such a loan. If you have a lower credit score, you will have to visit the official Department of Veterans Affairs homepage in order to request further details on low credit VA Loans.

USDA Mortgage Loans

Another option that you may want to utilize is a USDA Mortgage Loan. This type of loan is provided and funded by the U.S. Department of Agriculture and does not require an initial deposit, should the application be approved. It should be noted that USDA Mortgage Loans are only available for families that are classified as either low income or moderate income. Higher income families and individuals will not be able to qualify for this type of loan.

USDA Mortgage Loans are only available when you wish to buy property in a rural area. While it is true that farms will be some of the most common properties in rural areas, there are many cities that are also considered to be part of rural areas – properties can be purchased in such regions through a USDA Mortgage Loan.

One added benefit is that the insurance premium for the mortgage loan when utilizing this option is much lower to some of the other available options. You will usually be charged at 0.35% MIP (Mortgage Insurance Premium). There is an annual Mortgage Insurance Premium to be paid, but the fee is divided into your monthly payments.

Combination Mortgages

For those people with relatively high credit scores, a combination mortgage might also be an option that should be considered. With this type of mortgage, the amount applied for as a mortgage would only be equal to 80% of the house’s price. You will then apply for a standard loan that is equal to the remaining 20% – this loan will then be used as a down payment on the house.

This is a good option for people who do have a strong credit record but does not qualify for any of the other options that can be utilized to buy a house without a deposit.