Hey there, future homeowners! So, you’ve probably heard whispers about the elusive 0% down mortgage—the magical unicorn of home financing. You might be wondering, “Do they even exist?” Let’s dive into the nitty-gritty and see what’s really out there for those of us not swimming in cash (aka most of us).
What are 0% down mortgages?
In the simplest terms, a 0% down mortgage allows you to purchase a home without putting any money down upfront. Sounds great, right? But before you start dreaming of the perfect home with zero dollars in your pocket, let’s get real. While most homebuyers won’t qualify for a 0% down mortgage, there are options that get pretty close.
What’s actually out there?
- VA Loans: If you’re a veteran or active military, you’re in luck! The Veterans Affairs (VA) loan program offers 100% financing, meaning you can buy a home with no down payment. Sweet deal, huh? Plus, there’s no private mortgage insurance (PMI) required, which keeps your monthly payments lower (although they do have a one-time VA funding fee, typically 2.15% of the loan amount for first-time users (ranging from 0.5% to 3.3%)).
- USDA Loans: If you’re looking at rural properties, the U.S. Department of Agriculture (USDA) offers loans that also allow for 0% down payment. You need to meet certain income criteria, but it’s a fantastic option for those who qualify.
- FHA and Conventional Loans: While not 0%, you can snag a 3-3.5% down payment option with Federal Housing Administration (FHA) loans and some conventional loans. These are popular choices for first-time homebuyers, making homeownership a little more accessible.
- State Assistance Programs: Many states have programs designed to help first-time buyers with down payments, offering grants or second mortgages to cover that initial cash outlay.
The buyers’ market advantage
If you’re shopping in a buyers’ market (you know, when there are more homes than buyers), you might be able to negotiate with the seller to cover some of your closing costs. This can effectively offset your down payment, especially if you have a skilled real estate agent in your corner. Remember, negotiation is key!
Are 0% down mortgages worth it?
While true 0% down mortgages aren’t as common as you might hope, there are plenty of options to get you in the door with minimal upfront costs. So, before you throw in the towel, explore your options, and don’t forget to talk to your mortgage lender about the best path for you. Give us a call today at 737-510-2523
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.