Home loans are covered with several difficulties to obtain. It requires a lot of documents and involves different procedures. Any type of loans requires some money as down payment paid to the Government. These down payments vary from different lenders and loan programs. The Federal Housing Administration charges 3.5% of the total amount. That means you can avail 96.5% of the loan amount from the government. There are many other loan programs which charge down payment as more as possible. Most of the lenders charge 20 percent as down payment in most cases.
First time home buyer loans with zero down payments also available in some states. It depends on where you are applying for the loan. You don’t have to pay the down payment in this situation. You should think about it and find possible ways to get Home loans with zero down payment. This is a situation but there are chances to get loans with zero down payments.
Before the Housing Crisis, many lenders offer mortgages without any down payment. There are some loan programs allows people with good credit and income to purchase without paying down payment or minimum investment.
Government Zero Down payment loan programs:
- VA loans –Veteran’s Affairs Mortgage loans are provided to Qualified Veterans and present members of Military and their spouses for the first time buyers. These types of loans are simple and don’t require down payment. You do not have to pay the Mortgage insurance in this Loan. It requires funding fee that varies in between 1.25% to 3.3% that depends on the veteran service and the size of down payment. These loans can be used for construction and purchase of houses.
- USDA -The Rural Development loans provided by Untied States department of agriculture to the people who have good credit score and steady income. The bad credit people also can avail these loans, but they need to be into Agriculture farming to qualify. They location of the property you are purchasing must be in the area designated as eligible for zero down payment loans.
- State and Local Programs –The local states loan programs are available to encourage Homeownership. This kind of programs has income limitations and you to take home buyer class. National Council of State Housing Agencies website have all the local and state level loan programs.
Down payment Sources:
The Federal Housing Administration allows 3.5% down payment for example, for a $198,000 house purchases you needs to pay $6,930 as down payment. This you can arrange from your own money or with the help of your friends and family.
Private lenders take a minimum of 5% as down payment. You can get this from gift funds, if you make a big down payment of 20%, it can also be a gift. You can borrow your retirement funds as many of the people are purchasing houses with the retirement funds. Make sure you follow all the rules properly so that you don’t get hit with the tax penalty.