Are Zero Down Loans Still Available?

Posted on October 11 By Justin McHood

More than just a couple of times each week, someone calls me and asks if there are "any zero down payment loan programs still available" and then they act surprised when I tell them "well, it depends where you want to live..." but they always want to know more.

The only loan program that I am aware of that still offers no-money-down-financing is the USDA rural home loan program. If you are like most people, when you hear "USDA" you may think of cows and farming - but that isn't the case with the USDA loan program.

Some of the highlights to the USDA loan program include:

  • A true 100% financing solution for any home buyer
  • There is not a maximum loan amount
  • There is no monthly mortgage insurance or up-front mortgage insurance (there is on FHA loans)
  • 30 Year Fixed Rates
  • There are no limits on seller contributions
  • You can get gift funds from qualifying family or friends
  • You don' t have to document reserves (other loans require that you document reserves for 2-3 months of mortgage payments)
It sounds like the perfect loan, right? Kind of. There are some limitations to the loan program - the main one being the location of the house that you are buying. In order to qualify for the USDA loan program, the property being purchased must be eligible according to the USDA property eligibility database.

Other requirements for the USDA loan program include:

  • The property must be a principal residence
  • You cannot own any other real estate
  • There are income limitation requirements and all family income must be included in the calculations
The USDA loan program is generally a great loan program for people who are interested in buying a property that qualifies and meet the income guidelines. If you live in a major metro area, your area probably won't have any eligible properties - but make sure that you check the property eligibility database. And if you don't live in a major metro area... you might be surprised to learn that 100% financing is still available!

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