Can You Buy a House with Little to No Money Down?

If you’re in the process of buying a home, one of the more challenging aspects can be saving for a down payment.

When you’ve found your dream property, you want to do everything you can to expedite the process and become a homeowner. Once you calculate the down payment, it may not end up being a feasible option.

Saving for a down payment is definitely important, but there are alternative options if you have little to no down payment available to purchase a home. Find out how you can get a mortgage loan with no money down, what mortgage options you have, and what are some down payment assistance programs available to you.

CCM Smart Start

This program can help close the gap you need for a suitable down payment and bring you closer to purchasing a home. This specialized down payment program CCM offers aids first-time homebuyers by covering up to $4,000 of their down payment, making it possible for them to acquire their initial home. 

OHFA

The Ohio Housing Finance Authority (OHFA) offers several affordable loan options to help you achieve your dream of homeownership. OHFA offers 30-year, fixed-rate FHA, VA, USDA-RD and conventional mortgage loans with generous income and purchase price limits designed especially for homebuyers with low- and moderate-incomes. These programs help first-time homebuyers with 5% of the home's purchase price in down payment assistance.

Freddie Mac Home Possible Mortgage

Freddie Mac Home Possible® is a special mortgage program that is designed to give borrowers more flexibility and options when it comes to owning a home. The program is designed for low-income borrowers and only requires a minimum of a 3% down payment. 

Similar to the other programs we have discussed above, the borrowers must purchase a single-family unit and income restrictions are limited to 80% of the area median income. 

Fannie Mae HomeReady Mortgage

The Fannie Mae HomeReady Mortgage is a low down payment program designed for low-income borrowers. HomeReady is an excellent loan for eligible first-time homebuyers and seasoned homebuyers. 

Borrowers will need to have a credit score of 620 or higher to qualify. Competitive pricing options may be available for borrowers with credit scores above 680 or higher. 

FHA loan

Another option to buy a house with a low down payment for both first-time homebuyers and seasoned homeowners is with an FHA Loan. An FHA loan is a government-insured loan where the borrower needs to show a 3.5% down payment to purchase a home.  

FHA allows the borrower to obtain a qualified gift for the 3.5% down payment, in addition, the sellers can pay up to 6% of the purchase price toward closing costs, allowing the borrower to make the purchase with no money out of their pocket. Borrowers will need to show a credit score of 580 or higher to qualify for maximum financing.  As an alternative, a borrower could have a credit score as low as 500 with a 10% down payment and qualify.

Bright Future Program

This program compensates participants to be part of a study by paying 3.5% of their home purchase price up to $13,000 to apply toward their down payment and closing costs or to replenish their savings. Participants are eligible to secure a significant increase to their tax refund, or a reduction in their tax bill, by taking advantage of the residential clean energy tax credit. Benefits include: transparent process, no income restrictions and fast approval.

American Dream Downpayment Incentive (ADDI)

The City of Columbus American Dream Downpayment Initiative (ADDI) operates jointly with participating lenders by providing funds to create homeownership opportunities in Columbus for low and middle-income, first-time homebuyers purchasing a home that is within the City of Columbus corporate limits. This program gives first-time homebuyers up to $14,999 towards down payment and closing costs.

Final thoughts

There are many different mortgage loan options available if you want to buy a house with no money down, but it will largely depend on your personal financial circumstance and the location where you want to purchase. 

Before making a decision, it is important to consider the various factors and options to make the best choice for your situation. These solutions can provide a way for you to purchase a house with no money down, but they may come with their own set of pros and cons. 

Working with an expert mortgage lender like CrossCountry Mortgage ensures that you can explore the different home financing products available and select the best option for you. Whatever option you choose, it is essential to research and consider all options to make the best decision for your situation.