Although the housing market has made impressive strides, the difficulties that have hit Americans in 2020 have made it tough for a lot of people to afford the costs of buying a home. Even if a buyer can afford a monthly mortgage payment, they may have difficulty coming up with tens of thousands of dollars for a down payment. Fortunately, there are programs available that let qualified borrowers secure low or no money down home loans, opening up doors to financing and homeownership.

Discover Low & No Money Down Home Loans

In today’s mortgage marketplace, different lenders may offer a variety of different low and zero money down home loan programs. We’ll highlight the most common loan options below:

Government-Backed Loans (FHA, USDA, VA): These loans are insured by various agencies of the federal government, which provides some security to the lender and extends some valuable alternatives to the borrower. For example, the FHA loan, which is backed by the Federal Housing Administration, offers down payments as low as 3.5%. It also has a pretty lenient requirements when it comes to the source of your down payment.

USDA loans are supported by the United States Department of Agriculture. These loans are designed to help promote homeownership in low-income, low-population areas throughout the US. Borrowers who qualify for USDA loans don’t have to make a down payment at all, but they do have to purchase a home in an approved location and they must meet certain income guidelines. Want to get the details? Visit the USDA Loan page on the USDA official website.

VA Loans are backed by the Department of Veterans Affairs. They are zero money down mortgages specifically for active duty military, veterans, and surviving spouses. Eligible borrowers can get up to 100% financing at competitive rates, but they must meet very specific requirements when it comes to their military or veteran status. To learn more, visit the VA Loan page on the Department of Veterans Affairs official website.

Freddie Mac & Fannie Mae Low Money Down Loans (HomeReady, Home Possible): Freddie Mac and Fannie Mae are two government-sponsored enterprises (GSEs) that were created by Congress to help provide stability and affordability to our nation’s mortgage market. The primary purpose of Freddie Mac and Fannie Mae are to purchase loans from lenders in the secondary mortgage market. Now, here is where things can get kind of confusing, so read carefully: Fannie Mae and Freddie Mac do not service their own brand of mortgages. However, they do offer an “add on,” if you will, to conventional mortgages serviced by lenders. These are known as the Fannie Mae HomeReady and Freddie Mac Home Possible programs.

Through these programs, a borrower can get a conventional, regular, run-of-the-mill mortgage, but if they meet certain criteria, they can get the added solutions that the HomeReady or Home Possible programs offer. 

With Fannie Mae’s HomeReady program, borrowers can get a conventional loan with as little as 3% down, and with a credit score as low as 620. This can be a great alternative to an FHA loan, which requires at least 3.5% down and also comes with costlier mortgage insurance premiums. HomeReady borrowers will likely need to fall under certain income limits, but they can have up to 50% debt-to-income (DTI) ratio and a credit score as low as 620.

Freddie Mac’s Home Possible program allows borrowers to get a conventional mortgage with 3% down, and is geared toward low- to moderate-income applicants. It is very similar to Fannie Mae’s HomeReady program; however, Home Possible typically has a lower reserve minimum and allows applicants to use “sweat equity” to help pay their down payment. This program also allows co-borrowers, even for people who do not live in the home, as long as it’s a one-unit residence and they meet other qualifying criteria.

Down Payment Assistance Programs from Luxury Mortgage

In addition to government-backed low and zero money down loans, as well as Fannie and Freddie programs, some lenders offer their own down payment assistance services for qualified borrowers.

Luxury Mortgage is one such lender that provides down payment assistance in some of our serviced markets. We work closely with our borrowers to help them explore different state and federal down payment assistance programs that work in conjunction with our own mortgage programs. To learn more, call us at (888) 976-1227 for a free down payment assistance consultation.

Reach Out for More Information

Connect with our team of mortgage professionals today to learn more about low money down loan opportunities.

Luxury Mortgage is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government
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We're dedicated to helping borrowers find the right home loan program for their situation. Contact us today for a free quote and consultation.

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