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No Down Payment

How to Get a First Time Home Buyer Loan with No Down Payment

In most cases, securing an affordable mortgage with little or no money down is the first step for renters looking to purchase a house in the United States. Getting approved is typically the second step towards finally realizing one of those lifelong goals for many people – home ownership. It's not always as easy as some people can make it sound, and if you're trying to get a loan you may realize that you don't have a down payment. While this doesn't make it impossible to secure a home loan, it certainly can make it trickier to do. Luckily, there are a few things you can remember that will help you secure a zero down home loan for a first time buyer. It's no secret that finding mortgage with no deposit or down payment is not always easy, but the money you could save potentially makes it worth investing the time initially. That's why FirstTimeHomeFinancing.com has made it a top priority to help renters become homeowners with no money house loans if they meet the lending criteria.

One thing that may surprise you is that as a first time home buyer it could be easier for you to get your loan without a down payment than it would be for those who have already purchased a home in the past. In fact, there are several excellent loan programs from the US government that are designed specifically for that reason. The first thing you'll want to do is look into these programs. Here are two excellent options:

  • USDA Loans– These loans are set up to help those in rural areas with low income secure a first time loan for their very first home. Many of the loans actually offer no money down opportunities, which means that you may be able to secure a no down payment house loan through them with relative ease.
  • VA Loans – These loans are often easier to secure, provided you're a veteran. They're only available to American vets, and are backed by the US government. They're also offered to vets who qualify without the need for a down payment, and can provide great mortgage rates as well.

You have other options as well, including things like home buying grants that are set up to provide money for down payments or for home purchases. Another option is to seek out lenders that specialize in offering loans without a down payment. Look into the different first time home buyer loan options and you'll likely find one or more that matches up well with your situation.

There are some things you can do to help improve your odds of qualifying for a first time home owner's loan if you don't want to have a down payment. The best step is simply to ensure that you maintain a good credit score. The higher your credit score, the better your terms will be – and that includes the need for a down payment.

Additionally, try to maintain employment. Lenders do look at things like how long you've been employed by the same company, so find a great job and stick with it. It will help in a big way.

Finally, just be sure that you do the right amount of research. As long as you spend time looking into everything that a home loan, federally backed loan, or grant requires, you'll be able to start taking the necessary steps towards ensuring that you meet the guidelines. Once you do that, your loan will likely be just an application away.

Do I Have to Pay Mortgage Insurance on Home Loans with No Down Payment?

When you purchase a home, you'll likely have to take out a mortgage loan in order to raise the money needed to buy. Lenders will use a variety of different things to determine how much of a risk the loan is – your credit score, debt to income ratio, and so on. Larger risks often mean that the lender may end up requiring insurance of some kind.

This is especially true when a down payment of less than 20% is made – and especially in situations where no down payment is required according to the basics of the loan. In these cases, you'll have to pay insurance fees in order to back up the loan and reduce the risk to the lender.

But are there ways to get around mortgage insurance when you're not making a down payment? The answer is that it really depends on the kind of loan you take out. For example, while loans like the FHA loans with a 3% down payment requirement still require that you have mortgage insurance in place, other loans don't. The VA loans available through the government are the best example of this, and VA loans don't always require that you carry mortgage insurance.

Another thing to pay attention to is BMI or LPMI. Borrower Paid Mortgage Insurance, or BMI for short, is just what it sounds like – the person borrowing the money is responsible for paying the insurance costs. These will involve higher monthly payments initially, but after some time you'll end up having those insurance fees removed from the loan once you meet basic requirements. It's important to remember that not all zero down home loan programs are created equal.

Do I Need to Put 20% Down on a Home to Get the Best Rate?

There are a lot of different things that have traditionally been needed in order for people in this country to find the home of their dreams – and even more that need to be in place in order to qualify for the loan needed to buy that home and make it your own.

One of the biggest hurdles for many to clear is the down payment requirement. Traditionally, loan programs in the past have required a 20% down payment. In other words, if a home cost $200,000, the homeowner would need a $40,000 down payment in order to qualify for a loan. That's a huge sum, and it often makes the process of buying a home very restrictive.

But is it still the case? In most cases, it doesn't have to be. The days of needing a huge down payment are in the past, though it can still help. Here are a few points to understand.

no down payment
  • First, remember that the larger your down payment, the better your loan terms can be. Higher down payments make it easier to qualify for loans with lower monthly payments and other similar beneficial terms.
  • A down payment of 20% can also help you avoid being required to carry mortgage insurance, which is essentially an insurance policy that lenders require to protect themselves in the event that you default. Some loan programs may allow you to use lender paid mortgage insurance as well, reducing the overall costs of this.
  • Additionally, many loan programs no longer require that you have the 20% down payment amount. Fannie Mae and the FHA both have loan options that allow you to secure a loan with as little as 3% down. However, the amount needed for a down payment will depend largely upon your overall credit score and other factors like debt to income ratio. As such, it's important not to automatically assume that 3% will be a guarantee.
  • Also remember that no two loans are identical since each person's financial situation is different. As a result, you could secure a loan with different rates and terms than someone else, despite having a similar down payment amount. Never assume that your loan is out of your budget just because of how someone else's is structured – always talk to a mortgage pro.

In short, you do have options for securing a loan even if you don't have the kind of down payment that was once required of all who were taking out a loan. And the better your credit, the better your down payment restrictions will be. Combine decent credit with a solid employment history and decent debt to credit ratio, and you have the chance to buy the home of your dreams.

If you're serious about finding the perfect loan, take some time to shop around. Look into all of the different options out there and you'll find that there are more choices than ever before – including plenty of loans that don't force you into the 20% down payment.


 

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