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Top 3 questions about buying a home with no money down

Homeownership is possible, even without a down payment. If you’re wondering if buying a home with no money down is right for you, we have the answers to the top questions about low or no money down mortgage options.

#1: Can you buy a home with no down payment?

The short answer is yes. Zero down payment options are available if you qualify for certain government-backed loans. The answer to whether or not you should buy a home with no down payment is more complicated. Typically, the more you put down on a home, the lower your mortgage interest rate will be. If you buy a home with a 20% down payment or more, you’ll likely avoid monthly private mortgage insurance (PMI).

However, there are drawbacks to putting more money down. When weighing the costs of buying over renting, it may be financially advantageous to buy now instead of waiting until you’ve saved for an up-front payment. You can also only access money used for a down payment via a home loan refinance or your home’s sale, which both take time. Consider if a larger down payment will wipe out your savings, leaving you with no financial cushion to cover closing costs, moving expenses and inevitable home maintenance projects.

#2: What are low money down mortgage options?

If you’re aspiring to own a home within your budget, a low money down mortgage may be right for you.

Conventional loans

Conventional loans offer down payment options as low as 3% and low interest rates to borrowers with excellent credit scores.

FHA, FNMA HomeReady and FHLMC Home Possible mortgage loans

FHA, FNMA HomeReady and FHLMC Home Possible mortgage loans are lending options designed for low-to-moderate income borrowers with less-than-perfect credit and limited cash for a down payment.

MH Advantage® program

MH Advantage gives homebuyers a high-quality manufactured home option with a low-down payment and a lower interest rate. Offered in conjunction with Fannie Mae, the Guild Mortgage MH Advantage® program creates more affordable and innovative home options for families interested in owning a manufactured home.

#3: Do you need a down payment to buy a home?

With zero-down mortgage loans, you could be a homeowner sooner than you thought possible.

USDA loans

USDA loans are for low-to-moderate income homebuyers and offer 100% financing. This program is also known as the USDA Rural Development Guaranteed Housing Loan Program, but don’t let the term “rural” discourage you. This type of loan is available in many suburban areas as well. In general, USDA borrowers can’t earn more than 115 percent of the median income for the area where they intend to buy. Learn the advantages of financing a home with a USDA loan or check your USDA eligibility area.

VA loans

VA loans provide zero-down payment options to eligible members of the U.S. military and surviving spouses. These government-insured loans remove many of the typical up-front and ongoing costs of mortgage loans. In addition to military mortgage benefits such as low credit score and flexible income requirements, they don’t require private mortgage insurance (PMI).

If you don’t meet the qualifications for a USDA or VA loan, you may still reduce your out-of-pocket down payment costs by taking advantage of down payment assistance (DPA) programs. Eligibility is most commonly based on income, with assistance provided in the form of a loan or grant that’s sometimes forgiven over time.

Are you ready to open the door to affordable homeownership? Guild offers hundreds of loan products for a wide array of borrower situations, including first-time buyers, military families and rural homebuyers.

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply.

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About the Author: Guild Mortgage

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Mortgage Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,000 employees and over 250 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Guild Mortgage Company is a wholly owned subsidiary of Guild Holdings Company, whose shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.