Home loan programs that require little to no down payment


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Looking to move up in the housing world, but don’t quite have the cash? The following are a few programs that may be available to you:

VA financing 

If you are a veteran, you can purchase a house with no money down using a Veterans Affairs loan. The program offers some lucrative options at attractive rates. It also does not require any monthly mortgage insurance. Plus, with the seller credit for closing costs, you can get your foot in the door. The other beauty of VA financing is that while it does not require a down payment, it can be used on sizable loans all the way up to a million dollars and beyond (there are no loan amount limits).

USDA financing

USDA financing allows you to purchase a house in areas specially designated by the Department of Agriculture. Parts of Sonoma County that are eligible, for example, include all of West County, Lake County, Sonoma, Kenwood and the coastal regions. These areas are considered less industrialized by the USDA, which will allow you to purchase a house there without needing a down payment. Get money for closing costs in the form of a seller credit, and you’re in.

Calhafa and DAP 

These programs work like the ones mentioned above, requiring no down payment and allowing users in California to obtain a selling credit. CalHafa allows you to purchase a house with a second mortgage to offset the down payment. Meanwhile, the California down payment assistance program (DAP) allows you to purchase a house with a grant from the state. However the interest rate associated with such financing is about .5 percent above current market rates.

Traditional FHA 203b

This program requires a 3.5 percent down payment, but is limitless on location and incredibly flexible on payments owed. The real estate community even agrees that the program is viable. It also offers attractive interest rates and allows for a gifted down payment, as well as seller credits for closing costs.

Is no-money-down financing possible for everyone?

Is it possible to purchase a house with no money down? Yes, but it may not be probable. Why? Well, as a home buyer, there are two hurdles to overcome. The first one is getting qualified for the type of financing that you’re looking for with no money down. Some of the programs discussed here have income limitations, which means that if you earn too much money, you won’t qualify.

Second, there’s getting into contract. Getting into contract might prove to be very challenging, especially for the type of property that you might want and/or the area in which you want to live.

Most listing agents advise their sellers to pick the strongest offer they get. If you’re going up against other offers, and those other offers are either all-cash or have down payment funds, it could be particularly challenging to get into contract.

If your situation can support it, pulling money for a down payment in the form of a 401(k) or a gift from the family may greatly increase your odds of getting into contract at a lower rate. This option can be especially lucrative for veterans.

This article originally appeared on SonomaCountyMortgages.com and was syndicated by MediaFeed.org.

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