Buying a house with no money down is still possible, although responsible lenders will make you jump through a few hoops. Several programs, including those for veterans and military personnel, as well as some for people with low and moderate incomes, do exist, making it possible for you to get the home you want even if you have little cash on hand.
The United States Department of Veterans Affairs (VA), formerly known as the Veterans Administration, guarantees mortgages for veterans of the United States military, including both the Reserves and the National Guard. VA mortgages do not require a down payment, though you must pay a percentage of the mortgage as a fee, which can rolled into the mortgage itself. Another option is the zero down payment HomeBuyers Choice Mortgage, available through the Navy Federal Credit Union. The Navy Federal Credit Union is open to retired, active, or reserve members of the military as well as some civilian military employees.
USDA Rural Development Mortgages
If living in the country appeals to you, the United States Department of Agriculture (USDA) might be able to help. The Rural Development Loan program offers no down payment mortgages to folks with low-to-moderate incomes. Incidentally, you don't necessarily have to buy a house out in the sticks to get one of these mortgages. The USDA has its own definition of "rural," with many qualifying locations close to urban areas.
Okay, the Affordable Advantage program isn't really a no down payment mortgage, but all you'll have to cough up is $1,000 at closing. Compared to the 20 percent down payment that some lenders want, this program is a pretty good deal. Sponsored by Fannie Mae in partnership with state housing finance agencies, this is a small program active in only a few states, though it may expand over time. To get one of these 30-year, fixed rate mortgages, you'll have to pay the aforementioned $1,000, plus attend an approved housing counseling program.
Low Down Payment Options
If none of these no down payment programs work for you, you can still take advantage of some low down payment mortgages. The Federal Housing Authority has long offered its FHA loan program, which requires a minimum 3.5 percent down payment. The downside to this is that you'll have to pay some extra fees. Another option is getting private mortgage insurance (PMI), which protects your lender if you default. Homebuyers who agree to purchase PMI can end up making a down payment as low as 5 percent.
Lainie Petersen writes about business, real estate and personal finance, drawing on 25 years experience in publishing and education. Petersen's work appears in Money Crashers, Selling to the Masses, and in Walmart News Now, a blog for Walmart suppliers. She holds a master's degree in library science from Dominican University.