Is it possible to buy a house with no money down? Yes. Is that a smart choice? It depends. Securing a mortgage, especially for the first time, comes with many different considerations. Continue reading to learn more about avoiding a down payment from the team at GVC Mortgage.
For those purchasing a property in a specific rural location, the U.S. Department of Agriculture (USDA) offers USDA home loans, a mortgage guarantee program. Although USDA loans don’t need a down payment, applicants must still fulfill certain credit and income requirements and, in some situations, be first-time homebuyers in order to be eligible. Although a USDA loan requires no down payment, there is an upfront guarantee charge that borrowers can add to their mortgage payment. If you decide to roll it into the loan, you won’t pay anything at first. But, keep in mind that it increases the balance and will accrue interest throughout the course of the loan, so you’ll end up paying more in total.
You may be qualified for a VA loan with no down payment if you are a veteran, active duty service member, or surviving spouse guaranteed by the U.S. Department of Veterans Affairs (VA). Although this sort of loan does not require mortgage insurance, it does require an upfront funding charge that can be rolled into the mortgage, just like a USDA loan. It should be noted that while a down payment is optional, it can lower the funding price. Another benefit of VA loans is that many lenders provide these products at more affordable rates, which allows you to save a significant amount of money over the course of the loan.
Pros and Cons
Buying a house with no money down sounds like a great deal, right? Well, there are some other things to consider. The pros of no down payment are the ability to purchase a house more quickly without needing to save, and keeping more cash on hand. The flip side is that there are both short term and long term cons associated with no down payment. In the short term, your offer may not be as appealing as others. In the long term, you’ll likely end up paying more money due to additional up-front fees being included in the mortgage. Plus, you’ll have a larger mortgage to start with. No down payment most likely means a higher interest rate as well.
GVC Mortgage can help you with the loan process as well as help you decide which mortgage option is best for you. Contact us today at (317) 564-4906 or apply online. With locations in Carmel and Plainfield, IN, we are available to help make Hoosiers’ homeownership dreams come true!