10+ Types of No Down Payment Required Mortgages
Updated: May 8
Many are familiar with VA loans, and fewer are familiar with USDA loans, each of which provides a mortgage with no down payment required. Many are unfamiliar with some of the other types of loans available to a broader spectrum of buyers. In this article, I wanted to share about those and some of the many alternatives. I'm also throwing in an option for $100 down loans, & some options where the buyer doesn't need to come up with a down payment, though technically they require a down payment. Please keep in mind that I am not a lender, only a licensed real estate agent.
Typically, but not always, these programs are restricted by minimum credit scores, but some agents like myself can help future buyers with their credit for free prior to purchasing.
3 Conventional loans with no down payment required for 1st time home buyers
Option A:
Garrett Mortgage, powered by Langley Federal Credit Union, offers a conventional loan with no down payment required for true 1st time home buyers with no income limits. That said, you won't be able to get no down payment on this one if looking to purchase a condo.
While there are income limits on the different Homenow program, which is also available for true 1st time home buyers with Garrett Mortgage & Langley, up to 3% closing costs may be financed into that loan in addition to there being no down payment required.
Option B:
Navy Federal also offers a no down payment conventional loan, with a standard option or a jumbo option up to $1,000,000. You don't need to be active duty or a veteran to get it, but active duty do get preferential treatment. If you do get a mortgage with Navy Federal, you may want to request a closing date 40 or more days out rather than the 30 days that many local lenders can do. Also if you can find a local Navy Federal lender who is available on nights and weekends including via text, that's ideal.
Option C: (Only available in Atlanta, Chicago, Charlotte, Dallas and Los Angeles -- with plans to expand in 2023)
"Bank of America Introduces Community Affordable Loan Solution™ to Expand Homeownership Opportunities in Black/African American and Hispanic-Latino Communities...
Bank-provided down payment, no closing-cost mortgage advances efforts to broaden access to homeownership and adds to its existing $15 billion Community Homeownership Commitment."
See also here.
Doctor loans at many banks
Doctor loans are provided by a number of banks and typically aren't limited exclusively to doctors. These loans provide special financing for those in the health industry. I've seen where these can have an employment start date up to 90 days after closing. In the case of 1 bank, I saw where these were available to the following occupations:
• Medical Resident
• Medical Doctor (MD)
• Doctor of Dental Medicine (DMD)
• Doctor of Ophthalmology (MD)
• Doctor of Osteopathy (DO)
• Chiropractor (DC) - max LTV 97%
• Medical Fellow
• Doctor of Dental Surgery (DDS)
• Doctor of Optometry (OD)
• Doctor of Podiatric Medicine (DPM)
• Pharmacist (RPH) - without PharmD max LTV 97%
• Doctor of Veterinarian Medicine (DVM)
NACA: no down payment, no closing costs, below market rates, solid buy-down options, and credit score not considered
While you'll see with this program that it typically takes 3-6 months to go through the qualification process, the numbers, in the end, are good if you're able to use it for a purchase. This program offers a loan with no down payment, no closing costs, and below-market rates. You'll still need to have money for things like a home inspector & for prepaid expenses. Credit score is not considered, but there are some minimum credit element qualifications. Buy-down options are also good with this program. If you have above median income, you may not get the below-market rates, but the rates will still likely be lower than you can get in a number of places.
Caveat:
If you look at the reviews of NACA, the reviews are mixed, in part because of the hoops that need to be jumped through, the fact that it's a non-profit, and the fact that the qualification process can sometimes lead to you thinking you're prequalified but then being refused the loan after getting under contract due to something that wasn't checked prior to you receiving qualification. Some sellers/listing agents may be wary of this fact as well so it may hurt the strength of your offer.
Restrictions include but are not limited to:
You'll need to actively contribute to NACA via volunteering every year, but this task can be accomplished as easily as some social media shares.
You can't move out of your home and keep a NACA mortgage; if you wish to leave your home, you'll need to refinance to another product.
You'll need to work with a NACA qualified buyer's agent (I am one) and a NACA certified home inspector.
VA Loans for active duty, reserves, & former military
A VA loan is a solid option with no down payment required for Veterans, active-duty service members, National Guard, and Reserve members.