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August 8, 2016
By Jack Ryder

4 Mortgages that Require Little to no Down Payment

Simple. Thrifty. Living.

At long last, you have arrived at a time in your life when home buying is the logical next step. Furnishing your new home with furniture, décor and appliances can take a big chunk out of your savings, however. Therefore, it is a wise strategy to obtain a mortgage that requires little to no down payment, if possible.

If you are a veteran who has served our country — even in the National Guard or Reserves — you can get a mortgage with zero cash down by obtaining a VA loan. You may have to pay a small funding fee, but this will be tacked on to the loan payment. There is also no need for mortgage insurance, and that helps keep the amount of your loan payment down. Here’s where you can see if you qualify for a VA loan.


Another popular mortgage option for those who desire to pay as little down as possible is the Rural Development mortgage guarantee program, which is sponsored by the USDA. This mortgage requires no down payment, nor do you have to have mortgage insurance. The program name makes it seem like it is only applicable for people interested in buying farmland or other rural property, but this is not true. Ask your mortgage lender if the property you are interested in buying is eligible for the program. The USDA provides lenders with a map that highlights the eligible locations.

An FHA mortgage typically requires low down payments – around 3.5 percent. This is a smart choice for home buyers who have don’t have impeccable credit histories or the funds for a large down payment on their home.

If you have an above-average credit score, you can purchase private mortgage insurance. This allows you to make a down payment of only 3 percent. This type of insurance protects the lender if you neglect to make your payments. Once you pay down your loan so that you only owe 80 percent or less on your mortgage, you can drop the private mortgage insurance and this will decrease your monthly loan payment. The PMI is typically less expensive than an FHA loan, but it does have stricter qualification guidelines, such as a good credit history.

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