A Home Loan Advisor Explains Buying A Property With No Money Down


It is an undeniable fact that so many people get confused when it comes to saving funds in order to opt for a desired loan option. However, were you aware of the fact that it is possible to purchase a property without paying the down payment? In this piece of information, we have explained some suitable options that are available to a borrower according to a home loan advisor. In addition to this, we have also explained some substitutes for low down payment loans as well as everything to do if you do not have a great credit score. Therefore, without any further ado, let us get started.


Explaining the concept of zero down payment

Well, the name says it all. No down payment simply means a home loan one can obtain without making any previous payments. Basically, a down payment is the very first one that is made by a borrower towards purchasing a property. It is also due when a deal to home loan is closed by the lender. Mostly, lenders calculate down payment of a borrower as a percentage of the total amount one wants to acquire.

For example, if someone wants to purchase a home that is for $200,000 and there is a down payment of twenty percent, an amount of $40,000 is to be made during the closing. Why lenders need a down payment is because they are not at any risk. Since they have some amount in hand, the risk is automatically lessened if someone fails to make the payment on time.


For a number of payments, making a down payment is the biggest hurdle. After all, it is not at all easy to save sufficient money all this while. One can only obtain a suitable loan option with no down payment if opted for a government-backed loan. This is a loan option that is insured by the federal government. In simple words, the government foots the bill if a borrower is unable to pay back the taken loan amount. This loan option is provided to people who are in urgent need of financial assistance when purchasing a home. This means that government-backed loans are not much risky as compared to other loan options. There are two types of loans that are sponsored by the government. Both are mentioned below.

Different types of government loans

  • VA Loans: A borrower can always qualify for this loan option if they are an active duty service member. In addition to this, if he/she is a member of the National Guard, veteran or a spouse of a veteran, qualifying for this option is simple. VA loans are basically an alternative to opting for a loan with no down payment. As a borrower, a fee of two percent has to be paid by the borrower. In order to qualify for a loan, do the following:
  1. Serve about ninety consecutive days during a wartime.
  2. Served one hundred eighty one consecutive days during peacetime.
  3. Been a member of the Reserves or National Guard for ninety days at least.
  4. A spouse of a member who has died during a duty.
  • USDA Loans: A USDA loan is an option that is backed by the United States Department of Agriculture. A borrower can obtain this loan option with $0 down. In addition to this, as compared to other loan options, a borrower has to pay low fees also.

Are you someone who wants to opt for a loan with zero down payment? We hope this article will be useful for you.

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