Finding No Money Down Mortgage Loans

How to get no money down mortgage loans

There are several ways to buy homes with no money down mortgage loans.

Two of these are government-sponsored and they both have a set of requirements that not everyone will meet. A third option is one that takes some shopping around to find. A fourth way to get a home with no money down requires two lenders. Let’s look at the government programs first.

VA LOAN

The Veteran’s Administration offers 100 percent financing to members of the US military, active or honorably discharged and retired, and surviving spouses. Anyone who has spent at least six years in the National Guard or the Reserves is also also eligible. Spouses of service members killed in the line of duty may qualify. These loans are guaranteed by the VA.

Loans are available for more than $1 million in areas where housing costs are high. This can be helpful in Hawaii and parts of California where there are military bases and high home prices. Bankruptcy and bad credit are not automatic loan killers.

USDA LOAN

The common name for the United States Department of Agriculture  no money down mortgage loans is “Rural Housing Loans.” The USDA makes these loans to people who live in rural areas and people with moderate to low incomes. Before you say “I don’t qualify for this,” take a closer look at the requirements.

The USDA definition of “rural area” varies across the nation, but it is also quite broad. Many suburbs qualify as a “rural area.” Some outlying areas around Columbus, Ohio, fit the USDA’s geographic definition. Low to moderate income is also regional. A salary too high for the USDA program in State College, Penn., may fit the limits for Prattville, Ala, for the no money down mortgage loans. The regional USDA office can tell you if you qualify on these two counts.

USDA LINK NEEDS ADDED. Some of the best things about getting no money down mortgage loans from the USDA are rates are often lower than what commercial mortgage companies offer. If the home needs some work, that repair cost can be rolled into the loan. Two drawbacks are, the USDA does have an upper limit for the cost of a house and mortgages do require mortgage insurance.

OWNER FINANCING

This is the sweet spot for no money down mortgage loans. You negotiate with the property owner. You don’t have to worry about filling out an extensive mortgage application with a commercial lender. You and the owner decide what information you have to provide. The two of you decide what the payments will be, what insurance is required, interest rate and the life of the loan.

Owners who have a number of properties or don’t need money from a sale, may be very willing to offer no money down mortgage loans. Some property owners buy homes and then sell them with a private mortgage because this their investment strategy.

DOWN PAYMENT LOAN

No money down mortgage loans can also be done by combing two loans. The first is the conventional mortgage. The second loan is the down payment. Negotiate with the homeowner or the lender in the usual way. Get the down payment as low as you can. Then, find a loan company which will carry another note for the down payment amount.

With mortgages now requiring as little as three percent down, getting a small loan is little trouble for someone with good credit. For instance, a $100,000 home with three percent down means the new homeowner has to come up with $3,000. Many lenders will give this much money without collateral for the loan.

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