87°F
weather icon Clear

Five mortgages that require little or no down payment

Homebuyers with little money for a down payment are finding more home loans available for a low down payment or even no down payment.

The Federal Housing Administration insures loans with small down payments, and private mortgage insurers have relaxed their down-payment requirements. It’s even possible to get a mortgage today with no money down. The nation’s biggest credit union offers “zero-down” mortgages. The Department of Veterans Affairs and the Department of Agriculture guarantee home loans with no down payments.

Following are a few options for borrowers seeking low-down-payment and zero-down-payment home mortgages.

No down payment: VA loan

The Department of Veterans Affairs, or VA, guarantees purchase mortgages with no required down payment for qualified veterans, active-duty service members and certain members of the National Guard and Reserves. Private lenders originate VA loans, which the VA guarantees.

There is no mortgage insurance. The borrower pays a funding fee, which can be rolled into the loan amount.

For purchase and construction loans, the VA funding fee varies, depending on the size of the down payment, whether the borrower served or serves in the regular military or in the Reserves or National Guard and whether it’s the veteran’s first VA loan or a subsequent loan.

The funding fee can be as low as 1.25 percent or as high as 3.3 percent.

For first-time purchasers making no down payment, the funding fee is 2.15 percent for members or veterans of the regular military, and 2.4 percent for those who qualify through service in the Reserves or National Guard.

No down payment: Navy Federal

Navy Federal Credit Union, the nation’s largest in assets and membership, offers 100 percent financing to qualified members who buy primary homes. Navy Federal eligibility is restricted to members of the military, some civilian employees of the military and U.S. Department of Defense and family members.

The credit union’s zero-down program is similar to the VA’s. One difference is cost: Navy Federal’s funding fee of 1.75 percent is less than the VA’s funding fees.

No down payment: USDA

The Department of Agriculture or USDA’s Rural Development mortgage guarantee program is so popular that it has been known to run out of money before the end of the fiscal year.

“That’s the cat’s meow, my favorite loan program,” says Jeff Tufford, mortgage consultant for Epic Mortgage Group in Grand Blanc, Michigan.

Some borrowers are surprised to find that Rural Development loans aren’t confined to farmland.

“It’s not all rural,” Tufford says.

The USDA has maps on its website that highlight eligible areas. In addition to geographical limits, the USDA program has restrictions on household income, and it is intended for first-time buyers, although there are exceptions.

The USDA mortgage comes from a bank, and there is no mortgage insurance. Instead, the USDA levies a 1 percent upfront guarantee fee, which can be rolled into the loan amount, and an annual guarantee fee of 0.35 percent of the loan balance.

Low down payment: Mortgage insurance

Qualified borrowers can make down payments as low as 3 percent with private mortgage insurance, or PMI. For most borrowers, PMI costs less than FHA mortgage insurance. But PMI has stricter credit requirements.

PMI has another edge over FHA: Once your mortgage balance is under 80 percent of the home’s value, you can cancel PMI. You can’t get rid of FHA insurance unless you refinance into a non-FHA loan.

Low down payment: FHA

With a minimum down payment of 3.5 percent, the Federal Housing Administration, or FHA, is the low-down- payment option that’s available to people with imperfect credit histories.

The FHA charges an upfront premium of 1.75 percent of the mortgage amount. On a 30-year loan with the minimum down payment, there’s an annual premium of 0.8 percent of the mortgage amount, or $800 a year for each $100,000 borrowed — $66.67 a month for a $100,000 loan.

Don't miss the big stories. Like us on Facebook.
THE LATEST
GLVAR announces 2020 officers and board members

The Greater Las Vegas Association of Realtors (GLVAR) announced the results of its annual election of officers and board members, with local Realtors Tom Blanchard serving as its 2020 president and Aldo Martinez serving as 2020 president-elect.

Homeowners struggle with HOA parking restrictions

I would hate to see you taking steps to escalate the problem with your neighbor. Obviously, when possible a one-on-one meeting with him, which you have stated, is not an option.

Homeowner says HOA towed his car illegally

Most CCRs list the powers and authority of the board of directors, one of which is to sign contracts on behalf of the association. Although you did not send me a copy of the covenants, it would be most unusual if the association board did not have the right to sign a contract with a towing company. The covenants would not list what contracts can or cannot be signed. The ability to tow a vehicle in 2018 was most likely legal.

Tips on selling your home in the fall

For sellers wanting to close before the holiday festivities begin, below are five tips from real estate company, Opendoor, to help sell homes faster.

Neighbor wants owner to clean up tenant’s trash

If the association does remove the trash, the unit owner can be assessed all of the expenses that were incurred by the association. It also can place a lien on the unit if the owner fails to reimburse the association. In addition, the association can begin a foreclosure action against the unit owner.

Loud garge noise disturbing neighbors

Try contacting the owner one more time and invite him to meet with you at the community so that he can witness the noise. Arrange for some maintenance technician to be present for their suggestion as to how to remedy the problem and the cost.

Grandfathered rentals in HOA protected by law

If your CCRs did not prohibit renting or leasing at the time you purchased your rental homes the association cannot prohibit the renting or leasing of homes.

Don’t park in the handicap spot

Yes, you were wrong. And, no the association does not by law have to provide you any notice for parking in a handicap spot per NRS 116.3102 (1s).

Southern Nevada Health District implements pool regulations

As you are already aware, the new Southern Nevada Health District regulations went into effect July 1. At first the cyanuric acid level (stabilized chlorine) regulation was going to stay the same at 100 ppm, meaning the body of water would have to be drained and refilled as it always has been.