Want to buy a home without a down payment, but aren’t aware of how to go about it? Well, this is for you.
In this post, I will address the necessary information and relevant information concerning First-time home buyers with no down payment.
Buying a house isn’t an easy task considering the one will need to go through to get one. and now that the housing market has skyrocketed, it is no more complicated to buy a house than ever.
Though it seems there isn’t a chance for one to buy a home for the first time with no down payment, fortunately, there are available opportunities for properties with no down payment.
Make sure to carefully read through this article to get acquainted with the necessary information concerning First-Time Home buyers.
What is a First Time Home Buyer?
The word “first-time homebuyer” commonly refers to an individual who purchases a major property for the first time.
First-time homebuyers often qualify for special benefits such as low down payments, special grants, and assistance with paying closing costs that are sponsored by state and federal governments. Many lenders also offer first-time homebuyers incentives and special loans.
The U.S. Department of Housing and Urban Development (HUD) expands that definition even further. According to the agency, a first-time homebuyer is:
- Someone who hasn’t owned a principal residence for the three years ending on the date of purchase of the new home.
- An individual who has never owned a principal residence even if their spouse was a homeowner.
- Anyone who is a single parent who owned a home with their ex-spouse.
- A displaced homemaker who only owned property with their spouse.
- A person who only owned property that wasn’t in compliance with and cannot be brought into compliance with local or state building codes without constructing a new permanent structure.
How Do No Down Payment First-Time Buyer Work?
A no down payment first-time buyer or a government-backed mortgage means the loan is insured by the federal government. So, if a borrower bankruptcies on payments, the lender knows they may be compensated, at least partially, by the government.
Can One Buy a House With No Money Down?
Though there is hardly any programs for first time home buyer with no money down, the truth of the matter is there actually aren’t many people opting for such options.
And there are two major ways to buy a house with no money down. One is to get a zero-down USDA or VA mortgage. And the other is to get a low-down-payment mortgage and cover your upfront cost using down payment assistance.
FHA and conventional loans are available with just 3 orders per cent down, and that entire amount is allowed to come from down payment assistance or a cash gift.
Ways to Buy a House With no Money Down
Zero-Down USDA or VA mortgage: The program has no credit score requirements, but applicants are expected to demonstrate a willingness and ability to handle and manage debt.
- Meet income eligibility (cannot exceed 115% of median household income)
- Agree to personally occupy the dwelling as their primary residence
- Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
What is an eligible rural area?
Utilizing this USDA’s Eligibility Site you can enter a specific address for determination or just search the map to review general eligible areas.
VA Mortgage Loan: A VA loan mortgage is a type of no down payment loan, that is available through a program established by the U.S. Department of Veterans Affairs(VA) With VA loans, veterans, service members, and their surviving spouses can purchase homes with little to no down payment and no private mortgage insurance and generally get a competitive interest rate.
When borrowers apply for a loan, they need to provide the lender with a certificate of eligibility from the VA. To get the certificate, you’ll have to produce service-related documentation, which can vary based on whether you are active duty or a veteran.
VA Loan Terms
The terms of VA loans are quite generous compared to other mortgages and even to other federal loan programs. Among the benefits are listed below:
- No down payment is mandated unless required by the lender, or if the residence’s purchase price is above the established property value.
- There is no private mortgage insurance requirement.
- Closing costs are limited and may be paid by the seller.
- There is no prepayment penalty if the borrower pays off the loan early.
- Assistance is available from the VA to help borrowers avoid default.
Credit score minimum requirements differ slightly from lender to lender. The VA’s only credit requirement is for the borrower to be considered a satisfactory credit risk by a lender. The benefits of a VA loan are the same no matter which lender you choose.
Types of VA Loans
Below are some of the VA Loans offers:
Home Purchase Loans
VA home purchase loans assist veterans to buy a home at a reasonable interest rate. These purchase loans often do not require a down payment or private mortgage insurance.
Cash-Out Refinance Loans
Cash-out refinance loans initially allows mortgage holders to borrow against home equity to pay off debt, fund school, or make home improvements. This refinancing option offers a new mortgage for a larger amount than the existing note and converts home equity into cash.
Native American Direct Loan
The Native American Direct Loan program helps eligible Native American veterans finance the purchase, construction, or improvement of homes on federal trust land. Reductions in interest rates also come with these loans.
Conclusion on No Down Payment First-Time Home Buyer
In conclusion, i hope with the post about “no down payment first-time home buyer” , one is able to get acquainted with the necessary and go on ahead with the steps of buying a home with no down payment by carefully following this post.