First-Time Home Buyer Loans With Zero Down- Payment and these loans are secured by USDA and VA
The loan programs below are the only loans that offer you zero down payment with mortgage financing for what we might call conforming loan programs.
The GSEs-Fannie Mae (FNMA) and Freddie Mac (FHLMC) do not offer 100% financing loans. They do not purchase USDA loans or VA loans.
**Some lenders originate non-conforming loans they service in-house and that are not sold or guaranteed by Fannie Mae, Freddie, USDA, or VA.
USDA Loans are guaranteed by the United States Department of Agriculture
VA Loans are guaranteed by the Department of Veterans Affairs
Mortgage Loan With Zero Down Payment
USDA Loans – United States Department of Agriculture program
These are loans that offer a zero down payment mortgage option. They are backed by the United States Department of Agriculture (USDA) and offered by USDA.
They are allowed and must be made by approved lenders to help fund rural housing development for low-to-moderate-income individuals and families throughout the U.S. * the guidelines are flexible but as with all other programs, certain underwriting criteria are required.
The Requirements include but not limited to:
- The property must be located in an eligible rural area as defined by the USDA
- The borrower must be a U.S. citizen or permanent resident
- The borrower’s credit score must be at least 640 or higher
- The borrower’s debt-to-income ratio must be 41% or less
- The borrower must have a steady two-year work history
- The borrower’s income must not exceed 115% of the median income for the area in which they are purchasing a home
Mortgage insurance is required on all USDA loans. Credit must be good and debt to income within the 41% range as stated.
You should note that different lenders may quote you a minimum credit score according to their own guidelines. The rates they choose to offer are normally associated with your credit score, credit history, and other credit factors.
Veterans Administration (VA) as you probably know these loans are for individuals who have served their country. However, these are special loans with an LTV of 100%. There is a VA funding fee that is added to the loan.
Individuals who are still enlisted in the service and those who have been discharged are eligible to apply for this type of program.
To be eligible for a VA loan, you must meet one or more of the following requirements
- You served 90 consecutive days of active service during wartime.
- You served 181 days of active service during peacetime.
- You have 6 years of service in the National Guard or Reserves or served 90 days (at least 30 of them consecutively) under Title 32 orders.
- You are the spouse of a service member who died while serving or due to a service-related disability.
Eligibility for Service During War Time
Eligibility Requirements – for service during wartime:
World War II Veterans who served from September 16, 1040 – July 25, 1947
Korean War Veterans who served from June 27, 1950 – January 31, 1955
Vietnam War – Veterans who served from August 5, 1964 – May 7, 1975
In addition to meeting one of the above requirements, you must also meet the following eligibility guidelines:
- You must be a U.S. citizen or permanent resident.
- You must have a valid Certificate of Eligibility (COE).
- You must meet your lender’s credit and income requirements.
VA Loan Products and Guidelines
- Purchase
- Refinance and
- Cash-Out Refinances
The COE (CERTIFICATE OF ELIGIBILITY) is issued by the Department of Veterans Affairs (VA) and verifies your eligibility for a VA loan. To request a COE, you can apply online through the VA’s eBenefits portal, or you can submit a paper application by mail or fax.
Disclosure: We try to give you the most updated and the latest guidelines, however, changes sometimes occur daily, and we may not have seen the latest information. Please let us know of any questions you may have.
