As the phrase depicts, no own payment mortgage is a home loan that allows the first time homebuyers and the repeat homebuyers to purchase a property with no money required. The homebuyer just needs to pay the standard closing costs. Otherwise, the homebuyer gets to enjoy 100% financing from the mortgage lender.
If the idea of zero down payment home mortgages sounds acceptable to you, the VA home loan and the USDA home loan could be considered.
USDA Home Loan
Backed by the United States Department of Agriculture, the USDA home loan offers qualifying buyers 100% financing. Initially, the mortgage was known as the section 502 mortgage, and today it is often called the rural housing loan.
The USDA rural housing loan is available to the buyers looking to purchase properties within the rural regions. However, do not confuse this to mean that it is for the buyers living in rural areas alone. It is available to buyers in suburban areas too. Apart from being a zero own payment mortgage, the USDA home loan is a low-interest mortgage loan.
So, what are the requirements for you to qualify for this zero down payment mortgage? Keep reading to discover:
- The household’s annual earnings should not exceed the median household income for over 15%.
- Agree to occupy the property as the primary residence
- Must be a US national or a qualified alien
- The property should be within the eligible site.
The VA Home Loan
Second, in our listing of the no down payment home mortgages, we have the VA home loan. Backed by the Veterans Affairs department, the VA home loan is available to the U.S military members and their surviving spouses. Apart from being an affordable home loan, applicants enjoy several benefits. For instance:
- You are allowed to use the property as intermittent occupancy
- Bankruptcy and derogatory credit does not disqualify you
- Does not require a mortgage insurance
Here are some of the requirements to be eligible for the VA home loan:
- You are an active-duty officer and served 90 continuous days
- A veteran who meets length-of-service (90 days in wartime and 181 straight days)
- Surviving spouse of a veteran who died while in service or from a service-connected disability
The VA home loan is a good option for first-time homebuyers with a low credit score and does not have enough savings to afford a high down payment.