How to Purchase a Home With No Down Payment

The trend in home buying has moved away from large down payments. In fact, today’s average down payment is just 6 percent, with zero-out-of-pocket deals more common than you might think.

Accumulating savings while working can be difficult, especially for young first-time buyers with large amounts of student loan debt and beginner-level salaries. Here are several resources to consider.

Have you served in the military?

Veterans, active service members, and qualifying spouses should check the Department of Veterans Affairs, also known as the VA, for mortgage assistance. The agency offers many benefits, putting veterans in a powerful position to negotiate terms for a new home purchase or to refinance an existing home. The VA does not restrict assistance to first-time buyers.

Can you qualify for down payment help based on income?

The Federal Housing Administration, also known as the FHA, works with lower-income buyers. Program eligibility is based on yearly income and a minimum credit score. Down payment grants range from 3.5 percent to 5 percent of the purchase price, usually forgiven after owning the home for a specific number of years. Programs and eligibility requirements vary, depending on where you live. Pro tip: The FHA places caps on the entire mortgage amount it will insure.

Do you live in a rural area?

The Department of Agriculture also offers mortgage help, focusing its assistance on rural areas. Eligible buyers can use the program toward an existing home purchase, new construction, refinancing, and even home improvements to ensure safe and sanitary conditions.

Do you live in a city or state that issues mortgage credit certificates?

Issued by state or local governments, these certificates serve as a tax credit for first-time buyers. Because it reduces income taxes and increases net income, it can also help qualify a buyer for a mortgage. As long as the buyer lives in the house and pays the mortgage interest, this credit renews. It also can be used with a conventional mortgage or the above-mentioned government loan programs.