Can you buy a home with zero down payment?
Is saving for a down payment delaying your homebuying plans? Great news—it’s possible to buy a home with low or zero down payment and not drain all your savings. There are plenty of financing options available that still leave you with money in the bank if you’re looking to move.
Why is a down payment usually required?
A down payment is the portion of a home’s cost that you pay up front, usually applied on closing day. When you take out a mortgage, you pay towards the remainder of the balance every month.
Down payments are generally required to demonstrate your financial commitment to buying and keeping a home. The minimum down payment requirement is usually determined by the loan program you qualify for, given your credit history and the amount you want to borrow.
Providing a down payment reduces how much you have to borrow, which is the “loan” factor in your loan-to-value (LTV) ratio. A lower LTV brings other perks like a lowered interest rate and monthly payment.
When is a down payment not required?
If you’re eligible, some mortgage programs may not require a down payment.
- Department of Veterans Affairs (VA) loans—Eligible military veterans, service members and their spouses may borrow up to 100% of the home’s value plus benefit from lower interest rates.
- United States Department of Agriculture (USDA) loans—Low-to-moderate income earners purchasing a home in a rural area may qualify for full financing with no down payment.
How much should I put down?
Your lender can help you determine the “best” down payment for your budget. You can also estimate the impact of different down payment amounts by using our payment calculator.
Like anything, there are pros and cons to making a smaller down payment. Most loan programs will require you to pay mortgage insurance if you put less than 20 percent down. Plus, you can expect higher monthly mortgage payments since you paid less upfront.
On the other hand, if you provide a substantial amount down, you might not have a lot of money left for renovations, appliance repairs or even emergencies. It can also take years to save for a hefty down payment, delaying homeownership’s benefits, like wealth in the form of home equity, payment predictability and even tax benefits.
Guild’s down payment assistance programs
Whether you’re able to provide a 3% down payment or need some support, you have options. Programs are available for first-time homebuyers and even repeat buyers. Your loan officer can also explore state, county and city-specific programs you might be eligible for.
Below is a snapshot of our different offerings for primary home purchases.
| Name of program | Credit requirement | Buyer status | Income limits | Additional notes |
|---|---|---|---|---|
| Zero Down | 600+ | First-time and repeat | Flexible income requirements | Combines a repayable or forgivable second mortgage for the down payment and/or closing costs |
| 1% Down | 620+ | First-time and repeat | Area median income limits apply | Homebuyer education required |
| 3-2-1 Home Plus | 620+ | First-time only | Low to moderate income | Pre-purchase counseling required |
Zero Down program
Our Zero Down mortgage program, combines two mortgages. The first is an FHA mortgage up to 96.5 percent of the home price, and the second covers the rest of the down payment for you, plus additional closing costs if needed. There are also options where you may not be required to pay the second mortgage back—ask your loan officer for details.
1% Down
By taking part in the 1% Down program, you’ll only be required to provide one percent of the home’s price as a down payment while Guild covers two percent as a grant that does not need to be repaid. You’ll also be able to take advantage of the Payment Protection Program, allowing you to refinance later with no lender fees if interest rates drop.
3% down for the 3-2-1 Home Plus program
If you’re able to put down three percent of the home’s price, our 3-2-1 Home Plus program will provide up to $2,500 for closing costs in addition to a $2,000 eGift Card to The Home Depot®. You can take advantage of this unique offering if you’re a first-time buyer with low-to-moderate income. This is a great option if you’re on a tight budget and considering getting a home in need of a few repairs or renovations.
Government-funded down payment assistance
Nearly every state in the country offers some sort of down payment assistance program, and many counties and even metro areas do as well. Guild is a participating lender in over 800 government-funded programs, so it doesn’t hurt to ask your loan officer if there’s one available in your area.
Depending on the option you decide to move forward with, you may receive assistance in the form of a loan or grant that may be forgiven over time. Sometimes, you’ll have to live in the home for a certain amount of time before you can move or sell it. You may even be able to avoid mortgage insurance requirements with some programs. It all depends on the loan, your income eligibility and the location of your future home!
With so many assistance programs out there, homeownership is more accessible than you might think. To find the best financing plan for your goals, reach out to a loan officer near you today.
The above information is for educational purposes only. All information, loan programs & interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.