When I was a Realtor, buying a home with little to nothing down was a big trend. It was also a good way for people to get into their first house without having to touch their savings accounts, which are there so they can stay in their first house long-term.
Those days are largely behind us, with many people having to scrimp and save tens of thousands of dollars for even a small down payment. But there are still a few ways to get into your first home for very little money out of pocket.
Let’s talk about your options.
1. First-time home buyer programs in your state
There are tons of these programs, so you’ll have to do a bit of sleuthing to find out what’s available in your area and what the requirements are for you. In most cases, a loan is made to you in the amount of the down payment you require, but it’s done as a “silent second.” That means you don’t have to make a payment or acknowledge it exists unless you refinance, sell your home, or pay your primary mortgage in full.
You’ll have to work with a state-approved lender, and often the programs use FHA mortgages, but again, they’re area-specific. If you’re interested in these programs, you can google “first-time home buyer programs in (your state).”
You may also be able to get information on your local programs by connecting with a good mortgage lender, like those we recommend on this list.
However, don’t let anybody tell you that your state doesn’t have programs without doing a little research — most do, though you’ll have to qualify. We also maintain information on first-time home buyer programs by state on our mortgage calculator pages. You can click here to find your state, then scroll down to the first-time home buyer section.
2. VA mortgage loans
Did you or your spouse serve in the military? Well, you may be in luck. VA loans require a VA Certificate of Eligibility in order to apply, but for those who have served their country with honor, they can be rewarded with a home mortgage with a $0 down payment.
You’ll have to follow a few simple rules. Your purchase has to be for your primary home or a building with no more than four units that you’ll use as your primary home (you can rent out the units you’re not living in). You’ll also need to choose a home within your loan limit, which is about $800,000 in most of the United States, and up to $1.2 million in high-cost-of-living areas for a single-unit home.
Unlike other mortgages, VA loans don’t require mortgage insurance, but they do require a one-time fee called the VA funding fee. This fee can be up to 3.3% of your home’s sales price, but it may be waived in a wide range of circumstances, including if you have a service-related disability, you’re a surviving spouse receiving Dependency and Indemnity Compensation, or you received a Purple Heart.
3. USDA Rural Development loans
The USDA offers a variety of loans to homeowners and potential homeowners in rural areas. These are meant to both bolster the economies of small communities by making it easier to buy and maintain homes there and helping people who are living on the salaries that come with small rural communities, which are often limited due to the low cost of living.
There are two main purchase programs, both with zero down payment options: the Single Family Housing Direct Loan and the Single Family Housing Guaranteed Loan Program.
The Direct Loan program is specifically for low- or very-low-income families and must be applied for directly through the Rural Development program. However, the Guaranteed Loan Program is open to a much wider range of incomes, up to over $100,000 yearly in most areas, and higher in higher cost of living areas.
In my area, for example, the income limit for the Direct Loan program is $65,200 for a family of up to four people, and the Guaranteed Loan Program is used for incomes of up to $112,450 for a family of up to four people.
Zero down payment mortgages are still possible
We like to talk like the age of down payment assistance is long past, but it’s simply not true for a lot of buyers. Especially for first-time home buyers, zero down is definitely possible — it may just take a little more effort to find the programs that work for your situation if you don’t qualify for a VA or USDA mortgage.
Keeping more cash on hand once you’ve moved in is a smart move, because houses are like babies and can have all kinds of unexpected needs. While you’re looking for programs in your area, make sure to keep an eye on mortgage rates, too, so you can get in while the getting is good. Check out our list of current mortgage rates here.