What are Your Top Mortgage Loan Options with Low or No Down Payment?

As property prices are rising exponentially, it’s becoming more challenging for new homebuyers to buy a house. One of the biggest obstacles for buyers is arranging the money to make a large down payment. However, if you lack sufficient funds, you can consult with a mortgage lender in Denver for low- or no-down payment loan options.

Which Mortgages are Available with a Low or No Down Payment?

Buying a house with a low or no down payment is certainly an appealing option for people with low savings. It can also be an alternative for those who want to put less money into the house to keep more cash in hand. So, like many other home buyers, you may want to explore down payment assistance programs.

In many areas, you can find various government-backed or other mortgage loan options guaranteed by local authorities. Such mortgage loan options may usually require a low down payment, low mortgage interest rates, and fewer closing costs. Thus, you should look for top mortgage lenders in Denver providing low- or no-down-payment mortgages.

Benefits of Choosing Low- or No-Down-Payment Mortgages

1. Become a homeowner faster

Mortgage loans with little to no downpayment allow buyers to become homeowners easily without having to wait months or years.

2. Don’t miss a good deal

It's ideal to opt for a quick low/no down payment mortgage when there's a sudden drop in property prices. Thus, even if you don’t have enough savings, you might be able to take advantage of a good deal without missing out.

3. Maintain cash on hand for other purposes

If you have enough money for the down payment but have plans for house remodeling or other expenses, you may want to keep some extra cash on hand. In that case, a no- or low-down payment mortgage could be a viable option.

Top Mortgage Loan Options You Can Opt for

First, you need to know your mortgage options. It will help determine which type of mortgage you can qualify for without depleting your cash reserves. Here we have compiled a list of top mortgage loan options you can opt for along with down payment requirements and application criteria.

Zero Down Payment Mortgage Loan Options

USDA and VA loans make it possible to obtain a mortgage with a zero percent down payment. However, to qualify for these, loans you must meet certain eligibility criteria related to the location of the house, your income, and other requirements.

USDA Loans

These loans are meant for buyers who want to buy a house in rural or suburban areas. These home loans are insured by the U.S. Department of Agriculture (USDA). Although you don’t need to pay any downpayment for buying a home under USDA loans, applicants must have a good credit record. So, if you have a credit score of 640 or higher, you might qualify for USDA loans.

However, if your credit scores are low, you may want to get advice from an experienced mortgage broker. He will assess your loan application and let you know of any ways that can help improve your credit scores. They will also advise you about whether you can qualify for the loan by providing other credit proofs (i.e., rental and utility bills records).

Eligibility Requirements

You need to prove your eligibility by:

• US Citizenship or Permanent Residence proof

• Credit rating above 640

• A low debt-to-income ratio

• Your income should be below a specified level.

USDA loans are not available to those who have a high income. However, you should have sufficient means to pay an upfront guarantee fee and monthly mortgage payments.

VA Loans

These loans are guaranteed by the U.S. Department of Veterans Affairs (VA) and require no down payment. However, similar to USDA loans, you may need to pay a small fee upfront. These loans have more lenient requirements than conventional mortgage loans. In addition, these are available for applicants with a low credit score as long as they fulfill other requirements.

Eligibility requirements

VA loans are specifically made for buyers who have served in the military or have an active military member in their family. Thus, you could be an eligible candidate to apply, if you are:

• A military member

• Veteran

• Surviving spouse of a veteran

• A veteran with a disability (during their service)

Additionally, you may need to provide the paperwork to prove you have served in the military for the required duration.

Low-Down Payment Mortgage Options

If you cannot qualify for the zero-down payment mortgage, there are also a few low-down payment options you can explore.

FHA loans

These loans are backed by the Federal Housing Finance Agency (or the Federal Housing Administration). FHA and VA loans are both government-backed programs that are offered by third-party mortgage lenders. Therefore, you may want to consult with the top mortgage lenders in Denver to know if you meet their specified credit criteria to qualify.

For FHA loans, you may need to pay a down payment of 3.5%-10% on an FHA loan, depending on your credit score.

Eligibility requirements:

• Your income should be above the lowest limit set by the lender.

• Your credit score should be at least 580. Although, you can still get loan approval if your credit score is above 500. However, you’ll need to pay a higher down payment (i.e., 10 percent).

• You must have a stable income with proof of long-term employment.

• Your debt-to-income ratio should be favorable.

Conventional loans

If you have a credit score above 620 and a good income, you can easily get conventional home equity loans. These are generally available at a competitive interest rate and an affordable down payment. You may only need to pay a down payment of 3-5% as long as you fulfill all the requirements. Additionally, you may need to pay for private mortgage insurance each month.

Eligibility requirements:

• A favorable debt-to-income ratio.

• A strong credit score (i.e. 620 or higher)

• Sufficient evidence of income, assets, and financial reserves.

• Liquid funds for paying the minimum down payment

In conclusion

As home prices continue to rise, and you cannot afford to pay a high down payment, you don’t need to be discouraged. There are numerous programs available to assist you in purchasing a home with low/no down payment. For this, you may want to find the best mortgage lenders of November 2022 for a home loan at affordable mortgage rates.

Consult With The Top Mortgage Lenders in Denver for Expert Advice

To apply for a mortgage loan with a low or no down payment, you need to consult with an experienced mortgage lender in Denver. Professional mortgage lenders will require a few personal details to determine your eligibility. You don’t have to visit them for an assessment. You can simply apply online and know your qualification and loan options while sitting at home.

Whether you need conventional home loans, Jumbo loans, or adjustable-rate mortgages, feel free to get in touch with our team for a free consultation today!