No Down Payment? No Problem: Finding A No-Down-Payment Mortgage

In today's economy, it can be difficult to come up with a large down payment for a house. The good news is that there are several programs that can help first-time homebuyers own a house without having to save money for years beforehand. If you are hoping to buy a home soon, consider checking out some of these options to make the process easier on you, financially speaking.

USDA Home Loan

There are many rural and underdeveloped areas in the United States. The government would like to encourage people to buy homes in these sparsely populated sections of land. If you have a low or moderate income, you might be eligible for a no-down-payment loan through the USDA. You will need to purchase a home that is in a rural area, as defined by the USDA, and there are certain limitations that might apply. In many cases, your closing costs can be rolled into the loan, which means that it's possible to go to the closing with no cash in hand. Income limits vary by state; you can plug in your state at the USDA website to find out whether you might qualify.

VA Loans

A Veterans Affair (VA) loan is a program that is available to people who have served in the military. This can include those who were in the National Guard or some of the reserves, as long as they were active for six years. In some cases, surviving spouses of those who have served and passed away are eligible. In addition to not requiring a down payment, a VA loan is more forgiving of credit issues. While most other loans require near-perfect credit for a period of two years before the loan can be granted, the VA program has less stringent specifications. This is a good option for veterans who have struggled with their credit in the recent past, but now make enough money to make the payments on a home loan.

Navy Federal

If you, your spouse or certain family members have served in the military or work for the U.S. Department of Defense, you might be eligible for a Navy Federal no-down-payment loan. While this loan is similar to the VA loan, more people are eligible, and the funding fee is less than that of the VA loan program. It might be less forgiving of credit mistakes in the recent past, however. Your mortgage company will be able to tell you whether the Navy Federal or the VA loan is a better choice for your situation.

Remember that with any home loan, you will have some out-of-pocket expenses, such as paying for inspections on the house. Also, your lender will work with you to figure out what you can afford; without a down payment, you will need to finance the home's full value, so you will probably need to choose a smaller or less expensive home than you would if you had a down payment. Talk to your mortgage company about all of your no-down-payment options.

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