No Down Payment Loans – VA and USDA

There are only two viable mortgage loan programs that require no down payment: the VA Mortgage and the USDA Rural Housing Development Mortgage. Sure some loan programs can be structured with down payment assistance where they can be passed off as no down payment loans, but these two are true $0 down mortgages.

These two programs are very flexible in what the allow for closing cost assistance, but they are not for everyone; here is why:

The VA Mortgage Loan Program can only be used by qualified Veterans and unmarried spouses of a Veteran who died on active duty or as the result of a service-connected disability.
The USDA Rural Housing Mortgage can only be used to purchase homes in designated rural areas anywhere in the US; they cannot be used to buy homes in a metropolitan area.

VA Home Loans Explained In More Detail

You can only get a VA mortgage from a lender who participates in the VA Mortgage Loan Program. Not all lenders offer this program. There are some quirks to it like how appraisals are ordered which keep some mortgage companies from participating in the program.
To apply and get approved for a VA mortgage you must be able to prove your eligibility with a Certificate of Eligibility. Certificates of Eligibility can be gotten in several ways: 1. Take a copy of your DD-214 to your local VA office and apply for a certificate, 2. Complete a VA Form 26-1880 and mail it to the VA Loan Eligibility Center, PO Box 20729, Winston-Salem, NC 27120. Make sure you mail proof of your military service (a copy of your DD-214). If you need to overnight your request mail it to: VA Loan Eligibility Center, 251 N. Main Street, Winston-Salem, NC 27120. Again, make sure you send proof of your military service. 3. Request that your lender get your Certificate through the Web LGY system. If you are in the National Guard or have served in the National Guard, to be eligible for a VA loan you must have served at least 6 years.
If you were discharged from the Armed Forces with a less than honorable discharge you will most likely not be eligible for a VA Loan.
You can use your full Certificate of Eligibility for a VA loan if you have already had one if you have paid your original VA loan off in its entirety and you plan to live in the new property for which you intend to get the new VA mortgage. There are other cases about getting another VA mortgage around partial Certificates of Eligibility and Foreclosures. See the VA website for more information.
100% financing no money down mortgage
Seller can contribute to closing costs to where the VA buyer does need any of their own money
Up front funding must be paid or covered with the VA loan amount
No PMI required
Loan is assumable which means some else can take over your mortgage
No prepayment Penalties
Leniency afforded to Veteran who goes into default due to temporary financial difficulty.

USDA Rural Housing Mortgage In More Detail

There is no down payment required – 100% financing
No PMI required – no monthly mortgage insurance
Not required to have cash reserves whereas many Fannie Mae programs require 2 months reserves
You can have unlimited assets – many first time home buyer programs and down payment assistance programs are designed to disqualify you if you have too much money in the bank
Anyone can apply – the USDA Rural Housing Mortgage is not just for first time home buyers
30 year fixed interest rate mortgages
Property must be in a rural area: Check Property Rural Eligibility With USDA

Like we said, if you fit into either one of these home buying scenarios, these two loan programs are some of the best and most stable loan programs available in the US.

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