Zero down  home loans used to be all the rage several years ago, say around 2008-2009. Along with zero down, required credit scores began to float downward too. Next came the lack of income documentation. When you look at the financial salad of no money down, damaged credit and no income or asset verification, it’s kinda easy to see why the mortgage debacle happened during that period. These loans went away as the investors who put them out slowly went out of business. So are there any zero down mortgages left in the lending landscape?

Actually there are a couple. One is the VA home loan program. For those who are eligible for this loan, there is no down payment required and it is extremely competitive. If you’re VA eligible, this program can’t be beat as it relates to little money needed at the closing table. Oh, and speaking of the closing table... VA borrowers are limited to the types of closing costs they’re allowed to pay. 

Veterans of the Armed Forces and National Guard, active duty,  and surviving spouses of those who died while serving or as a result of a service-related injury. If you’re not sure if you’re eligible, speak to a qualified mortgage professional who can help make that determination.

There is another zero down program available which is one guaranteed by the United States Department of Agriculture, or USDA. There is a program insured by the USDA that is designed to finance homes in rural or otherwise sparsely populated areas. These areas are predesignated and the zip codes are recorded and kept. To find out if a home you’re looking at is in one of these eligible areas, your loan officer can help. Just provide the loan officer with the property address or zip code. If it is, you may be in luck. But there are also income limitations. Not only does the home have to fall in a certain area, the borrowers must also meet certain income limits.

Finally, there are programs that can assist with a down payment making for a zero down home loan. For instance, there may be grants or loans available that would take the place of a normal down payment. For an FHA loan for example, instead of a just 3.5% a grant or second loan would then be made in the amount of that 3.5% in lieu of the borrowers coming into the closing with that money.