How To Buy A House With No Money Down

One of the largest hurdles for many homebuyers is the amount of money needed to close on a sale. Buying a house without putting money down may sound too good to be true, but in some cases, it’s possible. You may be eligible to apply for government-sponsored and private lending programs.

Whether you’re just beginning your house-hunting journey or ready to put in an offer, a Loan Officer at New American Funding can help you explore your options for a mortgage with a minimal or zero down payment requirement.

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Why You Don’t Always Need To Put 20% Down

Although putting 20% down on a home was once the convention when purchasing a home, it’s no longer the standard. For many loan types, you can put down as little as 3%.

A smaller down payment means you’ll be able to save more money upfront for necessary home-improvement projects or furnishing your new space. It also gives you the opportunity to buy sooner, as it’s much easier to save for a 5% down payment than to save up for a 20% down payment.

Larger down payments come with equally positive benefits. You may qualify for a lower interest rate if you put down more money at once, which decreases your monthly payments. Plus, depending on your loan type and size of your down payment, you may also be able to skip the mortgage insurance.

Ultimately, the size of your down payment will depend on your financial status and the loan type. Conventional loans will typically require as little as 3% down but may include private mortgage insurance (PMI) until you’ve reached 20% equity in the home. FHA loans only require a down payment of 3.5%, in addition to a mortgage insurance premium. Additionally, certain government-backed loans don’t require a down payment at all.

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Mortgages With No Or Low Down Payments

Though widespread “no down payment” programs are no longer readily available, mortgage options without the down payment are obtainable, including:

• USDA loans — The U.S. Department of Agriculture secures these loans, which require 0% down. USDA loans are designed to support low- or moderate-income buyers and offer 100% financing. While you won’t need a down payment, you will pay an upfront guarantee fee — this can be paid at closing or paid out long-term.
• VA loans — The U.S. Department of Veteran Affairs backs VA loans, which help support active and retired members of the armed forces and their families with 0% down. Interest rates are typically lower, though a funding fee is required.
• Commercial or private lenders — Although most lenders no longer offer no-down-payment loans, they will accept down payments from other entities or individuals. For example, some states offer down payment assistance programs to cover down payments and some commercial lenders will accept these. Although this loan involves a down payment, the money isn’t coming from the buyer themselves.

If you aren’t eligible for the above options, you can pursue mortgages with low down payment requirements, including:

• FHA loans — FHA loans require a minimum down payment of 3.5%. Buyers with a lower credit score or a less stable credit history may benefit from an FHA loan. The federal government backs these loans, which are a great option for first-time homebuyers.
• Conventional loans — A Conventional loan requires as little as 3% down. However, it may include PMI if you don’t pay the full 20%. Once you reach 20% equity in your home, you no longer pay for PMI.

Navigating loan options and knowing which ones are best for you can be challenging. Save yourself time by contacting a Loan Officer at New American Funding to help you explore different loan options.

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Down Payment Assistance Programs And Home Buyer Grants

While home buyer grants are available, they can be difficult to find. The federal government offers a number of these grants, especially to those who may be struggling to afford a home.

Occupation-specific grants are also available, including grants for veterans, single moms, farmworkers, teachers, first responders, and more. Those with disabilities or who are experiencing homelessness may also qualify. It’s better to apply for a government-sponsored loan even if you don’t think you qualify.

Your mortgage lender can help you find these grant opportunities, especially at a city-specific level. Many cities offer Community Development Block Grants (CDBG) or Good Neighbor Next Door grants, both backed by the Department of Housing and Urban Development (HUD).

Depending on the state where you’re looking to buy, you may also be eligible for a savings match from a housing finance agency or a mortgage credit certificate. Above all, applying for grants and being persistent are two tactics to help you receive the most money toward your mortgage. Contact a Loan Officer at New American Funding to explore these grant programs and more.

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New American Funding Helps Make The Dream Of Homeownership A Reality

New American Funding offers a variety of programs that make it easier for you to buy a home, including:

• NAF Cash* — NAF Cash, an affiliated company of New American Funding, will purchase your dream home upfront with a cash offer, which tends to be stronger in the eyes of sellers and could help you save on the purchase price. Then, you can purchase the home back at the original price (plus a minor convenience fee).
• 5-Year Rate Protection Pledge — With New American Funding’s 5-Year Rate Protection Pledge, you can purchase (or refinance) a house now and refinance anytime within the next five years if interest rates drop. This refinancing offer comes free of any lender or appraisal fees.
• Buydown Loan — A Buydown Loan can be a great option for first-time home buyers working with little funds to make necessary home improvements or upgrade outdated appliances. This loan offers homeowners a lower payment rate on the first, second or even third year of a 30- or 15-year fixed-rate mortgage.

If you still have questions about any of these programs or want to find out if you’re eligible, New American Funding can help provide you with individualized assistance.

New American Funding’s dedicated Loan Officers are here to help you find funding to afford your dream home. In 2022, New American Funding was recognized as #1 in customer satisfaction among mortgage servicers by the J.D. Power 2022 U.S. Mortgage Servicer Satisfaction Study. The company was able to achieve this prestigious recognition through its dedication to helping every client from every background achieve homeownership.

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Ready to purchase your new home? New American Funding is here to help. Contact a Loan Officer to get started on your exciting new home ownership journey.

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*NAF Cash is fulfilled by NAF Cash LLC, an affiliated real estate company of New American Funding that is managed and operated in compliance with applicable legal and regulatory requirements. NAF Cash LLC does not originate loans or issue loan commitments. Terms and Conditions apply. Not available in all states. MI Real Estate Broker #6502431375. 41050 W 11 Mile Rd, Suite 220, Novi, MI, 48375. Phone 844-344-0531.