How You Can Buy A House With Zero Percent Down If You Qualify

What is a zero percent home loan?

A zero percent home loan is a loan that does not require you to put down a deposit. These days there are not too many lenders out there that offer a zero percent home loan (many offer a low down payment option but not a zero percent option) but there are some. If you have the means to make monthly mortgage payments but not the down payment, it is worth doing some research to find your best home loan (or mortgage) options.

Who can qualify for a zero percent home loan?

If you are an American veteran there are definitely zero percent home loans available to you through many lending institutions. This is because the VA guarantees mortgage for creditworthy veterans. The cost to you for this service is a purchase fee that can be wrapped into your total mortgage. Mortgage insurance is not required for VA backed mortgages. The credit union Navy Federal offers similar arrangements to military families and some civilian employees of the military and Department of Defense.

The only other major lender in this space is the USDA that offers a mortgage guarantee program on zero percent home loans. USDA backed mortgages are mainly available to first time buyers and are available for home purchases in defined geographical areas. Some areas will be rural but many are not. As with a VA backed mortgage, the fees associated with a USDA backed mortgage can be wrapped up with the mortgage, and borrowers are not required to have mortgage insurance. Prospective buyers do have to be eligible for a mortgage with stable income(s) and a decent credit score.

What are the downsides of a zero percent loan?

The main downside of taking a zero percent home loan is that you will end up paying more interest, and therefore more back to your lender, than a borrower who puts down a deposit. Only you can decide if saving a deposit is the better choice for you. It is worth consulting an expert for their advice.

Why are there less zero percent home loans available than there used to be?

After the global crash in 2008, it became apparent that banks and lenders had been making zero percent home loans available to consumers who did not have either the means or credit scores to keep up the mortgage payments on their homes. This so-called ‘toxic debt’ contributed to the crash here in the US, and since then banks and lenders have been required to lend more responsibly. That is why you only see zero interest home loans made available to those who serve or have served in our military, or to those who live in areas where the USDA has an interest in helping sustain or grow the current population.