In the past, if you had asked can you buy a house with zero down, the answer would have been a resounding NO. Most loan programs required a sizable down payment, typically around 20%.
Luckily, times have changed and the answer is now YES! You can buy a house with zero down.
Buy a house with zero down: USDA Rural Development Home Loan Program
The United States Department of Agriculture has a program that helps people purchase homes in small towns and/or rural areas. In order to qualify for the loan, you must purchase a home in an area designated as rural by the USDA.
The program is intended for individuals and families with moderate income levels, so your annual household income cannot exceed the limits for the Single Family Housing Guaranteed loan program. The income limits vary by county and family size. In most areas of Ohio and Indiana, for example, the limits are $78,200 for a family of 1-4 and $103,200 for a family over five, with some counties having higher limits. Some expenses can be deducted from your income, so if you are close to the income limit we suggest working with your lender to identify your eligibility.
Although this program is offered by the U.S. Department of Agriculture, it is NOT intended to purchase farmland or any type of income producing property, and is not restricted to “country homes”. It is designed to encourage homeownership in rural areas, which are defined by the USDA. Many borrowers are surprised to learn that they can purchase homes in towns that are considered rural!
Features of USDA Rural Development Loans
- No down payment is required. This a true 100% financing loan.
- Closings costs may be able to be financed into the loan.
- Generally easier to qualify for than conventional loans.
- Fixed rate mortgages.
- The property MUST be located in a rural area as defined by the USDA. Click here to learn more.
- The borrower must meet income eligibility guidelines for the Guaranteed Rural Housing Program. Eligibility is based on all household income, including income from adults living in the home who are not applying for the loan. Click here to learn more.
Buy a house with zero down: VA Loan
VA Loans provide home financing to our honored veterans. These loans are issued by qualified lenders and are guaranteed by the United States Veterans Administration.
The VA determines eligibility for VA loans. Click here to learn more about the VA’s eligibility requirements.
If you are interested in pursuing a VA loan, your lender can assist you in obtaining your certificate of eligibility (COE).
Features of VA Loans
- No down payment is required. This is a true 100% financing loan.
- Generally easier to qualify for than conventional loans
- Does not require private mortgage insurance.
- A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA. The funding fee may be financed into the loan.
- Fixed and adjustable rate mortgages.
If you’re not looking for a home in a rural area and you’re not a veteran, don’t worry! While they aren’t zero down home loans, there are still other programs that offer low down payment home loans.
FHA loans are an attractive option for many borrower and offer down payments as low as 3.5%.
Conventional loans have many programs and offer down payments as low as 1%, 3%, and 5% depending on the program.