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Do You Need a Large Down Payment to Purchase a Home?

April 26th, 2013 by Sean Stephens

 3 Loan Programs that offer a Low or NO Down Payment alternative

Thankfully with FHA, VA, & USDA Rural Home Loans there are three great options to work with for both Low and NO Down Payments. These loan programs are able to help in case you are unable to come up with a 20% down payment.  Below I have listed highlights of each of these loan programs that offer either a low down payment or 100% financing alternative.

1) USDA Loan Program – The USDA Rural Home loan program is through the U.S. Department of Agriculture. It is a rural housing program that allows for 100% financing in designated eligible “Rural” areas and offers NO down payment! The USDA loan program also allows the ability to finance closing costs up to the appraised value. This is a great option for helping to minimize out of pocket expenses while still maintaining an affordable payment. (To find eligible areas and income limits CLICK HERE)

2) VA Loan Program – U.S. Department of Veteran Affairs allows 100% financing for eligible service members who include: Active Duty, Veterans, Reservists, & Surviving spouses. The VA loan program offers 100% Financing!

We thank all of our military heroes for their service to our great country!

3) FHA Loan Program – Federal Housing Administration offers a lower down payment minimum of 3.5% of the sales price. Unlike the USDA Loan program, there are no income or area restrictions but there are loan limits on a per county basis. The FHA Mortgage Insurance Premiums are the highest monthly fee of the programs listed which can affect affordability.

Each of the Government Loan Programs discussed today are different but share common themes such as:

  • Flexibility with less than perfect credit & lower scores
  • However, remember minimum credit conditions do apply
  • Affordable alternatives for home buyers
  • Only for primary residences
  • Not restricted to ONLY First Time Home Buyers
  • Previous homeowners can be eligible as well
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