Top 3 questions about buying a home with no money down
Homeownership is possible, even without a down payment. If you’re wondering if buying a home with no money down is right for you, we have the answers to the top questions about low or no money down mortgage options.
#1: Can you buy a home with no down payment?
The short answer is yes. Zero down payment options are available if you qualify for certain government-backed loans. The answer to whether or not you should buy a home with no down payment is more complicated. Typically, the more you put down on a home, the lower your mortgage interest rate will be. If you buy a home with a 20% down payment or more, you’ll likely avoid monthly private mortgage insurance (PMI).
However, there are drawbacks to putting more money down. When weighing the costs of buying over renting, it may be financially advantageous to buy now instead of waiting until you’ve saved for an up-front payment. You can also only access money used for a down payment via a home loan refinance or your home’s sale, which both take time. Consider if a larger down payment will wipe out your savings, leaving you with no financial cushion to cover closing costs, moving expenses and inevitable home maintenance projects.
#2: What are low money down mortgage options?
If you’re aspiring to own a home within your budget, a low money down mortgage may be right for you.
Conventional loans
Conventional loans offer down payment options as low as 3% and low interest rates to borrowers with excellent credit scores.
FHA, FNMA HomeReady and FHLMC Home Possible mortgage loans
FHA, FNMA HomeReady and FHLMC Home Possible mortgage loans are lending options designed for low-to-moderate income borrowers with less-than-perfect credit and limited cash for a down payment.
MH Advantage® program
MH Advantage gives homebuyers a high-quality manufactured home option with a low-down payment and a lower interest rate. Offered in conjunction with Fannie Mae, the Guild Mortgage MH Advantage® program creates more affordable and innovative home options for families interested in owning a manufactured home.
#3: Do you need a down payment to buy a home?
With zero-down mortgage loans, you could be a homeowner sooner than you thought possible.
USDA loans
USDA loans are for low-to-moderate income homebuyers and offer 100% financing. This program is also known as the USDA Rural Development Guaranteed Housing Loan Program, but don’t let the term “rural” discourage you. This type of loan is available in many suburban areas as well. In general, USDA borrowers can’t earn more than 115 percent of the median income for the area where they intend to buy. Learn the advantages of financing a home with a USDA loan or check your USDA eligibility area.
VA loans
VA loans provide zero-down payment options to eligible members of the U.S. military and surviving spouses. These government-insured loans remove many of the typical up-front and ongoing costs of mortgage loans. In addition to military mortgage benefits such as low credit score and flexible income requirements, they don’t require private mortgage insurance (PMI).
If you don’t meet the qualifications for a USDA or VA loan, you may still reduce your out-of-pocket down payment costs by taking advantage of down payment assistance (DPA) programs. Eligibility is most commonly based on income, with assistance provided in the form of a loan or grant that’s sometimes forgiven over time.
Are you ready to open the door to affordable homeownership? Guild offers hundreds of loan products for a wide array of borrower situations, including first-time buyers, military families and rural homebuyers.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.