Many prospective house buyers question how much money they’ll need to save in order to qualify for a mortgage. But did you know it’s possible to buy a home without the need for a down payment?
In this post, we’ll look at some of your possibilities for buying a home without a down payment. We’ll also show you several low-down-payment loan choices, as well as what you can do if you have a bad credit score.
The Zero-Down Payment Mortgage: An Overview
A zero-down mortgage, as the name implies, is a house loan that does not require a down payment. A down payment is the initial payment you make toward the purchase of a property, and it is due when the loan is closed. Down payments are often calculated as a percentage of the total amount borrowed by lenders.
For example, if you buy a $200,000 home with a 20% down payment, you’ll bring $40,000 to the closing table. Lenders require a down payment because lenders believe that if you make an early investment in your property, you will be less likely to default on your loan. Down payments are a significant barrier for many home purchasers because it might take years to save up for a lump sum of money.
The only method to secure a mortgage with no down payment from the major mortgage investors is to take up a government-backed loan. The federal government insures government-backed loans. In other words, if you quit paying your mortgage, the government (together with your lender) helps foot the price.
People in need of financial assistance when purchasing a home can apply for government-guaranteed loans. This means that government-backed loans are less hazardous for lenders, and they can broaden their customary loan requirements to include people with riskier financial profiles, such as no-down-payment customers.
There are now two forms of government-sponsored loans that allow you to purchase a home with no money down: VA loans and USDA loans. Each loan has a unique set of requirements that must be met in order to qualify for a zero-down mortgage.
If you don’t fit the requirements for a VA or USDA loan, you may choose to consider a government-backed FHA loan or a conventional mortgage. Both of these alternatives will allow you to put down a little amount of money.
There is a suitable house out there for you.
RocketHomes.com is where you can find it.
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