It’s no secret that for most first-time homebuyers the hardest part of buying a home is coming up with the cash for a down payment. Finding a 20% down payment on a $250,000 house means forking over $50,000 in cash. That price, by the way, is the median for homes sold in the United States last year. The average home price in 2016 was more than $412,000.
Depending on your creditworthiness, a 10% down payment is possible, but it requires that you pay mortgage insurance until the loan-to-value ratio for your house reaches 80%. And, if you qualify, an FHA loan can be arranged with as little as a 3.5% cash down payment.
But even a 3.5% down payment on a $250,000 home comes to $8,750 in cash up front. That’s still a ton of money when you consider that most Americans have less than $1,000 in savings.
That doesn’t mean you should give up. The staff at Realtor.com have noted five ways that you can buy a house with no cash down payment. If you want to live in Manhattan, you aren’t likely to find a no-down payment loan, but if you want to live in Manhattan, Montana, well, your chances improve substantially.
U.S. Department of Agriculture Loans
The USDA has a loan program that offers 0% down payment loans if you want to buy a home in town with fewer than 10,000 residents (Manhattan, Montana’s, population is about 1,500). You also need to earn a “low or moderate” income, but that amount varies by location. In Manhattan, Montana, for example, a low annual income for a family of four is $36,000 and a moderate income is $63,100. In San Francisco, a low income is $61,500 and a moderate income is $112,200.
Credit Union Loans
Credit unions may offer members low or no down payment mortgages. According to Realtor.com, you need a good credit score and must earn less than 80% of the area’s median income.
Veterans Administration Loans
In order to qualify for a VA loan you must have served in the U.S. military for a minimum of 90 consecutive days during wartime, 181 consecutive days during peacetime, or at least six years in the national guard or reserves. There are financial requirements as well, and they are fairly strict and not all properties are eligible.
Navy Federal Loans
The Navy Federal Credit Union offers 100% financing on a home purchase with eligibility requirements similar to the VA loans.
Down Payment Assistance
There are more than 2,200 down-payment assistance programs in the United States, not all of which offer 0% down-payment loans, but most of which offer significant help supplying cash for a down payment.
See Realtor.com for more details and links to other websites with additional details on the various programs.