For many, the biggest hurdle to purchasing their dream home is the down payment, which can be anywhere from 14% to 20% of the purchase price. With soaring house prices and an increasing cost of living, this amount may be unachievable, but there are some ways to buy a home without putting down money.
Here’s how you can buy your dream home without down money.
House Mortgages That Require No Down Money
There are some excellent mortgage options that do not require a down payment and make homeownership easier to attain.
USDA Loans
The USDA mortgage program is among the most popular loan programs for first-time homebuyers. This loan is insured by the US Department of Agriculture (USDA), and to qualify, you need to purchase a house in an approved area with a population of no more than 35,000.
Qualification requirements:
- Credit: Homebuyers with lower credit scores may be eligible for this loan as there is no minimum qualifying score. Some people with credit scores as low as 640 have been approved for this loan.
- Debt: Your debt-to-income ratio (DTI) will be looked at and should be no more than 41%. Your monthly mortgage payment cannot exceed 29% of your gross monthly income.
- Income limits: The USDA imposes income limits for specific areas. If your total household income is above the income threshold for the area you want to purchase in, you will not qualify.
While this mortgage does not require a down payment, you should be aware that you must purchase mortgage insurance, which comes to 2% of the loan amount. If you pay for the insurance upfront, it can be as low as 1% of the loan amount.
VA Loans
With zero down payments, this home loan from the US Department of Veterans Affairs (VA) makes homeownership easier for active-duty and retired military members. Unlike other mortgage programs, VA loans have flexible eligibility requirements for those with lower credit scores.
Qualification requirements:
- Credit: Homebuyers with a credit score as low as 580 may qualify for this kind of loan.
- Duty status: The only people qualified for this loan are active duty members, retired members, and qualifying surviving spouses
- Debt: You need a debt-to-income ratio (DTI) of less than 41%
Unlike USDA loans, you don’t need to purchase mortgage insurance for this loan type.
Purchase a Home with Mortgage Experts in Cape Coral, Florida
Are you ready to purchase your dream home in Florida? Reach out to our friendly team at Island Coast Mortgage so we can get your mortgage application started. Call us at (239) 214-7011 to schedule your free consultation.
