Low Down Payment Home Loans For First Time Home Buyers

Last Updated 6/11/2015

What no and low down payment home loan options are available for first time home buyers today?

With house prices and mortgage interest rates so low, and the world bullish on US home value growth it is an incredibly appealing time for first time home buyers to get on the property ladder. Unfortunately, the one misconception that has held many home buyers back has been the expectation of needing large down payments. Many first time home buyers might be surprised at how little they need to take advantage of the market and begin enjoying all of the perks of homeownership.

Five 100% Financing and Low Down Payment Solutions for First Time Home Buyers

USDA Home Loans

USDA home mortgage loans are one of the least well known options, yet one of the best for first time home buyers with little money to put down. These loans can provide 100% purchase mortgage financing, with relatively easy qualifying. The main reason that they have been underutilized is that they have often been incorrectly perceived as only being for very rural properties. While USDA lending is restricted based upon maps, many might be surprised at just how urban many of the green lighted areas are.

VA Home Loans

Veterans Administration (VA) home loans also provide 100% financing for first time home buyers. This is restricted to veterans, members of the services, and select family members, yet is one of the best VA benefits available. These low and no down payment purchase mortgages can be easier to qualify for than most programs, and often offer among the lowest interest rates. If there is any chance you think you may qualify, then definitely consider inquiring about a VA loan to buy your first home.

FHA Home Loans

FHA loans have long been the go to option for those seeking high LTV financing. FHA mortgages are often ideal for first time home buyers that don’t have the strongest credit, need low interest rates to help them qualify, and have very limited financial resources.

New 3% Down Fannie Mae Loans

In an effort to spur more lending and home buying the US government made several pushes to ease borrowing in late 2014. Among these moves was the introduction of the 97% LTV Fannie Mae and Freddie Mac loan. These loans for moderate and low income borrowers require a down payment of just 3% of the home purchase price. These purchase mortgages designed specifically for first time home buyers include Fannie Mae’s My Community Mortgage, and Freddie Mac’s Home Possible Advantage which USA Today says will make a comeback in March 2015.

Down Payment Assistance

In addition to the above there are also many local and regional down payment assistance programs across the US which can be combined with a variety of loan programs. These include local grants, help with closing costs, and low rate and deferred payment second mortgages. In some high cost areas like San Francisco these programs can provide high six figure sums to be used as down payments. Additionally many areas also offer this type of help for making home improvements and renovating properties.

Ultimately, it is clear that there are many low and even no down payment options for first time home buyers eager to take advantage of the current real estate market.