Buying a Home
Image source: USA Today

What You Need To Know About Buying a Home for Little to No Money Down

Government home loans have some of the most lenient eligibility requirements. They can also save you money through the many benefits they offer. The Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA) guarantee these loans. 

Buying a Home
Image source: USA Today

Each one of these government loans has its eligibility requirements and its benefits. Also, these loans have a specific type of applicant in mind. FHA loans are perfect for first-time borrowers, VA is for former and current military members, and USDA loans are for lower-income applicants.   

You can also opt for a mortgage. In future, you can also refinancing a mortgage if there is a need.

FHA Home Loans

These loans are perfect for first-time borrowers because they have the most lenient eligibility requirements out of any home loan available. They also offer some great incentives for applicants who are eligible. These benefits include:

  • A low down payment of 3.5%, which is lower than the 20% required by most conventional loans.
  • FHA down payment assistance grants are available. 
  • Lower closing costs. 
  • Lower monthly mortgage payments. 

FHA loans also allow lenders to let the applicant borrow more than the property is worth to finance renovations and repairs needed by the property. However, one limitation in FHA loans is that applicants can only borrow up to the loan limit by a specific county. 

To be eligible for these loans, the applicant must have a credit score of at least 580, although individual lenders will accept applicants with lower credit scores as long as they make a higher down payment.  

VA Home Loans 

These loans are exclusive to Veterans, Active Duty Service Members, and eligible spouses. Most real estate experts consider these the best home loans available due to their lenient eligibility requirements and excellent benefits. Which include:

  • $0 down payment requirement.
  • Lower interest rates.
  • Lower monthly mortgage payments. 
  • No mortgage insurance premiums.
  • No prepayment penalties.

Besides these benefits, as of January 1st, 2020, VA home loans no longer have loan limits for first-time borrowers. As a result, VA home loans are even better, as borrowers can now take out loans up to $5 million through VA Home Loan Centers, as long as they can afford it. However, loan limits still apply to borrowers with over one active VA loan. 

USDA Home Loans      

Home loans guaranteed by the USDA are outstanding for lower-income borrowers that want to purchase a home in a rural community. These loans have some lenient eligibility standards but can only finance modest single-family homes. Eligible houses cannot be for any business purposes. Some benefits that USDA loans offer are:

  • $0 down payment requirement.
  • Lower monthly mortgage payments.
  • Competitive interest rates.

For eligibility, USDA loans require that the applicant have a history of at least 12 months of making payments on time and an income at or below the county’s low-income limit. Also, the applicant must be a U.S. citizen, have a credit score of at least 640, have a stable and dependable income, and the property must be his or her primary residence.

In addition to the eligibility requirements mentioned, the applicant must adhere to the loan limit based on the area the property is located. 

There You Have It  

Owning a home and paying little to nothing in initial costs is possible through government-guaranteed home loans. The only requirement is that you meet their eligibility terms. Once you do, there are multiple money-saving benefits to enjoy as well. Homeownership need not be an unattainable dream.

Phil Georgiades is the CLS for, a brokerage specializing in first-time buyer home loans. He has more than 22 years of working in real estate. To learn more about programs available to you or apply for a home loan, call them at (877) 432-5626.

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