How to Qualify for a Mortgage With No Down Payments

Are you ready to purchase your new home but worried about the upfront cost? A house is often the most significant financial investment that a person will make in their life. Unfortunately, rising housing prices are making it difficult for people to reach the point where they’re ready to take that step.

The common practice is to put down a 20% down payment to secure your new place. However, there are a few ways around it. Here are a few loopholes you may qualify for to buy a house with no down payment.

VA Loans

If you or your spouse are veterans or current military service members, you may qualify for a VA Loan. These loans are one of the best ways to slip around having to put a down payment on a house. To qualify, you must meet at least one of the VA loan requirements, which include:

  • Have at least 181 days in active duty for peacetime veterans or 90 continuous days for wartime veterans.
  • For the National Guard or Reserves, you will need to prove that you have had at least six years of service.
  • Be the spouse of a service member who died on active duty or due to a service-related injury.

Keep in mind that although Veterans Affairs doesn’t have any official credit score requirements to apply for a loan, mortgage lenders look at credit scores to decide whether someone is eligible for a mortgage loan.

USDA Loans

Are you interested in purchasing a property in a more rural or developing suburban area? If so, you may qualify for a USDA loan.

The Department of Agriculture backs this loan to encourage expansion in specific rural and suburban areas. It will allow prospective buyers to purchase a property in these designated areas with zero money.

Before you apply, here are a few requirements to qualify for a USDA loan:

  • Have a credit score of at least 640
  • Do not have a debt to income ratio that is higher than 45%
  • Have a gross household income that is under 115% of the average income of the county in which your prospective home resides
  • Do not use your home as a working farm.
  • Have the home you are purchasing be your primary place of residence

Physician Loans

Many people are unaware that professionals in the medical field may be qualified to apply for a physician loan. These are loans created to help professionals in the medical field purchase a home before they might be able to, alleviating them from the stress of a down payment.

Unlike other types of loans, lenders usually want applicants to pay a PMI (private mortgage insurance) if the down payment is under 20%, but not with physicians loans. These lenders are generally flexible on employment requirements and are lenient towards higher debt to income ratios due to the high cost of medical school for potential applicants.

So, if you are a medical professional early in your career and lack significant enough income to buy a home, a physician’s loan may be there to save the day.

Find the Loan That’s Right For You

If you are looking to purchase a home and meet any of the requirements above, you may be able to skip over the down payment and head straight for the front door of the house of your dreams. If you are still curious about your options, get in touch with a lending professional who will be able to walk you through the best mortgage loan options for your specific needs.

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