No Down Payments?

It’s a long-held assumption that in order to purchase a home you must do so with a 20% down payment. While that certainly is a benchmark that you could strive towards, chances are you might not actually need that much. A recent report from the National Association of Realtors shows that the average down payment for homebuyers is actually lower: 7% for first-time homebuyers and 17% for repeat. But is it possible to get that number down to zero?

Hard But Not Impossible 

If a 7-20% down payment isn’t feasible for you, there are options out there for 0% down payments. While these loan options were more common before the housing bubble burst of 2008, there are still options out there. Here are a few ideas! 

USDA Loans

This government loan option is a great zero percent down option– if you qualify. There are benchmarks that must be met in order to qualify for a USDA loan. They are: 

• A credit score of 640+
• A debt-to-income ratio of 40%
• A household income less than 115% of your area’s median income

Those approved for a USDA loan will enjoy lower interest rates which are currently set at 3.25% (as of April 25th, 2023).

VA Loans 

The U.S. Department of Veterans Affairs offers these 0% down loans for active-duty military personnel, veterans, and their spouses, and they generally come with a lower mortgage interest rate as well. All that is usually required is to pay a VA funding fee!

FHA Loans

Another fantastic option to consider, especially as a first-time homebuyer, is a Federal Housing Administration loan. They are popular with first-time homebuyers as they sometimes accept as low as 3.5% down payment. The requirements for FHA loans are:

• A credit score of at least 500
• A debt-to-income ratio of less than 43%
• A stable income and,
• Proof of employment.