November 27, 2022

How to Get a Mortgage With No Down Payment

A 20% down payment isn’t the only way to get a mortgage. No-down-payment home loans can open doors to homeownership for buyers with limited savings and free up cash for expenses such as closing costs or home repairs. Here’s what you can expect when you’re buying a home with no money down.

What Are the Best No-Down-Payment Mortgage Lenders of 2021?

Lender

USAA

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0% Min. Down Payment
620 Min. Credit Score

Lender

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0% Min. Down Payment
620 Min. Credit Score

Best for consumers with credit scores between poor and good

NBKC Bank is a Kansas-based mortgage lender. It originates home loans in all 50 states.

Before You Apply

  • Mortgage types: conventional, fixed rate, ARM, FHA, refinance, VA, FHA Streamline Refinance, Refi Plus, VA Streamline Refinance
  • Minimum FICO credit score: 620
  • Maximum loan amount: Not disclosed
  • Better Business Bureau rating: A+

Best Features

  • Borrowers with fair credit may qualify.

  • It features a simple online application process.

  • VA loan borrowers aren’t charged lender fees.

See full profile

Best for VA loans

Veterans United Home Loans provides mortgages to veterans and military families in all 50 states and Washington, D.C., and specializes in VA loans.

Before You Apply

  • Mortgage types: VA, VA jumbo, refinance
  • Minimum FICO credit score: 640
  • Maximum loan amount: $1.5 million
  • Better Business Bureau rating: A+

Best Features

  • No down payment or PMI are required.

See full profile

Best for no down payment

Alliant Credit Union is a nonprofit financial cooperative. The credit union serves customers in all 50 states. Mortgage products include conventional, jumbo and refinancing loans, and home equity lines of credit.

Before You Apply

  • Mortgage types: Traditional, ARM, refinancing, home equity line of credit, Alliant Advantage Mortgage
  • Minimum FICO credit score: 620
  • Maximum loan amount: $2.5 million
  • Better Business Bureau rating: A+

Best Features

  • No-down-payment mortgages are available for first-time homebuyers with excellent credit.

  • Mortgages are available to borrowers with FICO credit scores as low as 620.

See full profile

Best for fair credit

Flagstar offers banking and lending products in every state. Borrowers can select from conventional or government-backed mortgages, such as FHA, VA and U.S. Department of Agriculture loans, and opt for adjustable-rate mortgages. Other choices include home equity loans and lines of credit.

Before You Apply

  • Mortgage types: conventional, VA, ARM, FHA, USDA, jumbo, refinance, home equity
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Flagstar Bank provides a broad selection of mortgages and home equity loans.

  • Some mortgages require no or a low down payment.

  • Borrowers can apply for loans online.

See full profile

Best for product availability

Freedom Mortgage Corp. serves more than 1 million customers in all 50 states, plus the District of Columbia, the U.S. Virgin Islands and Puerto Rico. The lender offers various mortgage products, including conventional, adjustable-rate, jumbo, refinance, Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture loans.

Highlights
Mortgage types offered: Conventional, FHA, VA, USDA, Refinancing (conventional), Refinancing (FHA), Refinancing (VA), Refinancing (USDA)
• Minimum FICO score: 620 (conventional), No minimum (VA), 540 (FHA), No minimum (USDA)
• Max DTI: Not disclosed
• J.D. Power satisfaction rating: Two out of five

Best Features

  • Wide selection of mortgage loans.

  • Prequalification is available.

  • Borrowers with fair credit may qualify.

See full profile

Best for low down payment

Spring EQ is a Philadelphia-based home equity lender. Home equity loans are available in more than 30 states and the District of Columbia, and Spring EQ has plans to expand into more.

Highlights

  • Mortgage types offered: Home Equity
  • Minimum FICO score: N/A
  • Max LTV: 100%
  • Max DTI: N/A
  • Closing costs: N/A
  • Equity required: N/A
  • J.D. Power satisfaction rating: N/A

Best Features

  • Loan limits ranging from $20,000 to $250,000.

  • Reduced fees for loans more than $80,000.

  • Loan funding in as little 14 days.

See full profile

Best for short-term loans

U.S. Bank is a national bank based in Minneapolis that provides various banking products and services as well as a handful of mortgage options. The lender offers conventional loans, Federal Housing Administration loans, Department of Veterans Affairs loans, jumbo loans and more.

Highlights:

  • Mortgage types: conventional, refinancing, fixed-rate, ARM, Federal Housing Administration loans, Department of Veterans Affairs loans, jumbo
  • Minimum FICO credit score: undisclosed
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A

Best Features

  • Provides mortgage loans nationwide.

  • Allows you to apply online without first speaking with a loan officer.

  • Assists U.S. Bank customers with closing costs.

See full profile

Best for Veterans Affairs loans

USAA specializes in offering financial services to active-duty service members, veterans and their family members. To use USAA’s products, you must meet its military service requirements, be the spouse of a USAA member or be the child of a USAA member. This requirement means many customers are also eligible for VA home loans, so these are one of USAA’s specialties.

Highlights

  • VA loan products available: Fixed- or adjustable-rate VA loan or IRRRL
  • Minimum FICO score: 620
  • Maximum debt-to-income ratio: Varies, but recommends keeping it less than 36%
  • J.D. Power satisfaction rating: Five out of five but not rank eligible

Best Features

  • Good customer service ratings.

  • VA Interest Rate Reduction Refinance Loans, also known as IRRRL or streamline refinance loans.

See full profile

What Are Today’s Mortgage Rates?

Locking in a low mortgage rate now can save you thousands of dollars over the life of your loan. Compare your mortgage rate offers with national average trends for current mortgage rates.*

Can You Get a Mortgage With No Down Payment?

You can get a no-down-payment mortgage, although you’re more likely to find a low-down-payment mortgage. Many mortgages require a down payment, even a minimal 3%. But putting down 20% is no longer the standard, even for some conventional loans.

While it’s true that the best terms are generally reserved for well-qualified applicants who can make a 20% down payment, you can take advantage of various mortgage programs that demand far less.

But if you want a no-down-payment home loan, keep in mind that the loan types available to you may be limited. Typically, no-down-payment mortgages come in the form of government loans or special lender programs.

Unfortunately, homebuyers with low credit scores might not qualify for some programs.

What Credit Score Do You Need to Buy a House With a Low or No Down Payment?

There is no single minimum credit score you need to get a no- or low-down-payment mortgage; it varies by program. For example, VA home loans don’t have a minimum credit score requirement, and neither do USDA home loans. With FHA home loans, you can get a mortgage with a credit score as low as 500, but you can reduce your down payment if your score is higher than 580.

The important thing to remember is with a higher credit score you’ll be able to qualify for lower interest rates on your loan.

What Are the Zero-Down Mortgage Options?

Zero-down-payment loan options are the key to homeownership for many borrowers who lack the savings to put toward a home but qualify for a loan. Generally, conventional loans don’t provide zero-down-payment options.

Here are a few zero-down home loan programs to explore with 100% financing for your primary residence.

Department of Veterans Affairs Home Loans

The VA offers a zero-down-payment loan with no loan limit but a limit on what the VA will guarantee for qualifying veterans and spouses. Veterans who want to apply must furnish a Certificate of Eligibility.

The VA loan program has no minimum credit score, but most VA-approved lenders have credit score requirements.

Some borrowers may need to pay an upfront funding fee, which can be financed. VA home loans do not require mortgage insurance.

U.S. Department of Agriculture Loans

“People think USDA is all about farms, but it’s about areas that are outside of suburbia,” says Bill Banfield, executive vice president of capital markets, Quicken Loans.

The Single Family Housing program has no credit score requirements, but applicants must show an ability to manage debt and pay bills.

Not only is no down payment needed, but also the mortgage insurance is only 0.35%, compared with 0.85% for an FHA loan.

Doctor Loan Program

Many lenders participate in the Doctor Loan Program, and some offer zero-down options. The program is designed for early career physicians, dentists, residents and fellows, who frequently have little or no money saved and big student loan bills.

Credit Unions

Many credit unions have zero-down mortgages, although they generally require membership to qualify. Promotions can change, so check with your lender for the latest information.

When Is a Zero-Down-Payment Mortgage a Good Idea?

A zero-down mortgage is a great option for a homebuyer who has limited cash on hand but is otherwise well-qualified to purchase a home.

Some good reasons for choosing a no-money-down mortgage are to:

  • Reserve savings for other expenses, such as closing costs or home improvements.
  • Leverage cash for investing rather than tying up money in a mortgage.
  • Get into a home faster by not having to save 20% of the loan value.
  • Take advantage of the market’s historically low interest rates rather than waiting to save and possibly missing out on a home.

Getting into a home without making a large down payment might sound attractive, but putting money down on a mortgage has its benefits. Even a small down payment can save money because your monthly payment will cost less, you may lock in a lower interest rate, and you could avoid paying private mortgage insurance.

Some good reasons for making a down payment on your mortgage:

  • You can save on interest rates because your lender perceives less risk.
  • You can avoid paying a private mortgage insurance premium.
  • You can reduce your monthly payments.
  • You can immediately have some equity in the home: The more you pay down your mortgage, the more your equity goes up.

How Can You Get Down Payment Assistance?

If you can’t afford a down payment, consider down payment assistance programs. Down payment and closing cost assistance programs are available nationwide, especially for first-time homebuyers or homebuyers who meet certain income requirements.

“There are various down payment assistance programs available, depending on your state, city and county, and a local lending specialist can provide you with that information,” says Ann Thompson, retail sales executive-West, consumer lending, Bank of America. “There are also programs with a higher interest rate where you can get partial bank-paid credit to help with closing costs.”

Some banks have special programs for low- to moderate-income homebuyers, which may include down payment assistance and grants. “The goal is to give people access to credit to help meet down payment requirements,” Banfield says.

What Are Low-Down-Payment Mortgage Options?

If you can swing a down payment of any size, you will broaden your loan options and save on interest charges. Overall, your mortgage costs will be less if you can foot even 3% of the loan value as a down payment.

“There’s no free lunch,” says David Battany, vice president of capital markets, Guild Mortgage.

Consider these low-down-payment mortgage options:

Piggyback Loans

A piggyback loan is a second loan taken at the same time as your primary mortgage to cover a substantial portion of your home’s purchase price. It can be used to cover part of your down payment. This type of loan can reduce the cash you need to purchase a home and help you avoid private mortgage insurance. A piggyback loan can also ensure that your loan amount stays under conforming loan limits, which can make it easier to qualify for a government-backed loan.

FHA Loans

The FHA offers a low-down-payment mortgage that allows you to put as little as 3.5% down. Borrowers can qualify with credit score requirements that are more lenient than conventional low-down-payment loans. Your FICO score must be at least 580 to make a 3.5% down payment. For scores between 500 and 579, you’ll need a 10% down payment.

HomeReady by Fannie Mae

This program offers a 3%-down-payment loan for low- to middle-income homebuyers. That’s slightly lower than 3.5% for the FHA loan, but the credit guidelines are tougher. Your credit score must be at least 620 to get a HomeReady loan, and if it is 680 or higher, you could get better pricing.

Freddie Mac Home Possible Loans

This fixed-rate loan has a down payment as low as 3% and lower-cost mortgage insurance than on FHA loans. Freddie Mac’s Home Possible program is available for buyers with credit scores of 620 or higher.

Conventional 97

The Conventional 97 Fannie Mae loan requires a 3% down payment and sets no income limits. You’ll need a credit score of 620 or higher for this conventional loan.

The Department of Housing and Urban Development’s Good Neighbor Next Door program is for eligible teachers, law enforcement officers, firefighters and emergency medical technicians. Eligible borrowers can purchase a HUD-owned single-family home for 50% off its appraised value.

The required down payment is as low as $100, and the buyer must live in the home as a primary residence for at least three years.

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