Many potential home buyers wonder how much they’ll need to save in order to get a mortgage. But did you know with zero down home loans, it’s possible to buy a house without needing the upfront funds of a down payment?
As the name suggests, a zero down home loan (or zero-down mortgage) is a home loan you can get without a down payment. A down payment is the first payment you make toward the home, and it’s due when you close on your home loan. Lenders usually calculate your down payment as a percentage of the total amount you borrow.
Lenders require a down payment because the theory goes that you be more hesitant to default on your loan if you have an upfront investment in your home. Down payments are a major hurdle for many home buyers, as it can take years to save up for a lump sum of cash.
There are currently two types of government-sponsored loans that allow you to buy a home without a down payment: VA loans and USDA loans. Each loan has a very specific set of criteria you need to meet in order to qualify for zero down home loans. You may want to get a government-backed FHA loan or a Conventional mortgage if you find out you don’t meet the qualifications for a VA loan or a USDA loan. Both options will allow you to make a low-down payment.