Can You Buy a House with No Money Down?
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August 9, 2022

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When you’re on the hunt for a home and are working with limited finances, the down payment may push you to look for other options. You may even wonder – can you buy a house with no money down?

Yes, there are home loans available that don’t require any money down for your home mortgage.

We’re going to explain how you can buy a house with no money down, the types of loans available, and assistance programs that help lower the down payment.

We’ll also review the pros and cons of no-money-down home loans and most importantly—how you can speak with an experienced home loan specialist today.

Buy your first home with no money down

House hunting is the fun part. But when you get down to the logistics, buying a home can seem intimidating. 

The cost quickly adds up when you begin to tally the mortgage payment, closing costs, additional fees, and the down payment. 

However, there are home loans out there that can take a considerable chunk of that cost down, these are called no money down loans. 

One of the main considerations when you buy a house is the down payment. 

The down payment is a portion of the total cost of the home and is typically due when you close on the house.

For example, if you’re buying a home that costs $250,000 and you have a 20% down payment, you’ll have to pay $50,000 when you close. 

The rest of the monthly payments will come from the remaining costs on the mortgage for the duration of your loan term. 

However, it’s important to note that these loans are only available to those who are eligible and choose to work with investors who also share the cost with the federal government through federally backed loans. 

Which type of loan requires no money down?

No money down loans come from federal government backed agencies, such as the VA (Veterans Affairs) and the USDA (United States Department of Agriculture).

VA Loans

VA loans are an option for those who are active-duty members, in the National Guard, a veteran, or a spouse of a deceased veteran. The loan is backed by the VA and allows you to purchase a home without a down payment.

All mortgages require some form of mortgage insurance, however with VA loans you’ll only be required to pay a fee that goes back to the VA.

USDA Loans

USDA loans are backed by the United States Department of Agriculture and were designed to encourage home buyers to purchase in more rural and suburban areas. USDA loans also only require a small fee in lieu of mortgage insurance. 

You’ll have to meet certain criteria for either loan, which can change depending on different factors, such as your location. 

You should check to see if you meet the criteria for the VA loan and the USDA loan before you reach out to a loan specialist.  This will allow you to ask about their specific criteria and what that may mean for you.

Pros and Cons of a no-down payment loan

If you’re eligible for a no down payment loan, the savings could be huge. 

These loans are incredible tools available to you, allowing you to purchase a house with few funds up front. 

If you’re thinking of moving forward with a no-down payment loan, then let’s review the pros and cons for a better understanding of these loans. 

Pros

  • You’ll be saving a lot of money without paying a down payment. This can be helpful for other purposes, such as an emergency or to put back into your new house. 
  • You’ll be able to build equity quicker by not having to wait to save money for the down payment. This means your home will be yours and considered a financial asset much quicker.
  • When you close on the purchase of your home, you may have to pay closing costs. Some VA loans offer a no-down payment mortgage with no closing costs either. 

Cons

  • Most mortgages require premium mortgage insurance. However, with no-down-payment loans, you’ll only have to pay a small fee. This is the fee required by the federal agency backing the loan. 
  • You must meet specific income brackets to be eligible for either VA or USDA loan, as well as location and military requirements to consider. 

Let’s not forget that every approved lender has different criteria you must meet so ask your potential lender about their specific criteria.

A no-money-down loan isn’t the best option for everyone, but don’t be discouraged. There are other programs available that help make the down payment more affordable and get you in your dream home sooner.. 

Down payment assistance programs

Down payment assistance programs are another great option to help get you into a home with less money up front. 

These programs help cover the cost of the down payment, which means you pay less  money up front on your home purchase.

Down payment assistance programs are also backed by the federal government and must be offered by an approved lender.

Most lenders have strict requirements, for instance being a first-time home buyer or requiring you to have a certain income level for a set amount of time. That’s not the case with Austin Capital Mortgage’s proprietary DPA program. 

Austin Capital has a life-changing down payment assistance program:

  • No income limits
  • Co-signers allowed
  • Minimum credit score of 660
  • No purchaser limits
  • Loan limits follow the FHA Guidelines

These requirements, or lack thereof, are extremely helpful to buyers who may need financial assistance with a down payment but don’t meet the criteria for a no-money-down loan.  

If you’re eligible but you’d rather save extra money, Austin Capital is your answer.

Our specialists will listen to what you’re looking for and be able to review which program would be most beneficial.

Buying a house is exciting and life-changing—don’t wait any longer. 

Reach out to Austin Capital Mortgage today. 

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