Buying a Home without a Down Payment

By Marianne Salina
Loan Page Columnist

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If you are a prospective homebuyer with good credit but can't finance that huge down payment on your mortgage, you may consider a no-down-payment loan. Often people with good credit will prefer to use their money for home equity purposes, such as furniture for their new home instead of a down payment.

A no-down-payment mortgage means that you are financing 100% of the home. Mortgage brokers created this type of loan in response to how, historically, property values will rise after purchase, allowing you to create home equity.

Is a No-Down-Payment Mortgage for You?

There are a few people who opt for no down payment loans: people who can only buy a home if there isn't a down payment and people who choose to invest in home equity. If you are a first-time homebuyer, you may not have saved up the required amount that mortgage brokers are asking, and if you have good credit, the no-down option may work for you.

There are a few requirements for securing a no-down-payment mortgage:
  • Minimum 700 credit score
  • You must occupy the property for which you're receiving the mortgage
  • You must have 3% in cash for the transaction for closing costs
  • Total monthly debt to income ratio cannot exceed 41%
  • Maximum loan is $300,700
It is important to meet with several mortgage brokers to determine what your needs are and how your budget, credit, and income factor into an agreement.


Understanding No Down Payment Mortgages, Home Purchase Center, Quicken Loans Zero Down Mortgage

About the Author

Marianne Salina is a freelance writer and columnist in Spokane, Washington. She graduated with honors upon receiving her B.A. in Literature/Creative Writing from UC Santa Cruz.

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