Money Saving

How Can I Get a Mortgage Without a Down Payment?

July 27, 2021

The average down payment in America is about 6% of the borrower's loan value. This means that if you want to buy a home that’s selling for $250,000 then you’d need to have $15,000 for a down payment. That might sound like a lot of cash (because it is!). However, it might not be necessary to pay that much upfront.

If you're like most people, you probably think that you need to have a down payment saved up in order to get a mortgage. But did you know that there are lenders who will give you a mortgage without requiring any money down? In addition, you might be eligible to pay a down payment of just 3% or even 0% depending on your credit score and a few other qualifying factors.

In this post, we'll tell you how to get a mortgage without a down payment. Keep reading to learn more!

What is a Mortgage & How Does it Work?

A mortgage is a loan that's secured by real estate. This means that if you stop making payments on your loan, the lender could take possession of your house as collateral. However, in simpler terms, a mortgage is a loan that people take out specifically to finance a home purchase.

How do mortgage loans work? When people take out a mortgage they usually make monthly payments towards the outstanding loan balance, which is pretty much the same as other loans. To do this, though, you usually have to also put a down payment down that’s roughly 6% of the total you need to borrow.


We’ll get into down payments in just a bit, but it’s important to note that the biggest difference between mortgage loans and other types of loans is usually the interest rate. 

A mortgage loan can come with either a fixed-rate interest rate or an adjustable-rate interest rate. As the names suggest, one loan would come with a fixed interest rate for the entire loan and the other would vary from year to year. While a lot of new homeowners think a fixed-rate mortgage loan would be best, they can actually hurt you in the case that interest rates drop drastically (like they did in 2020 due to the onset of the pandemic).

How Much Do You Need on a Down Payment of a House Purchase?

As mentioned above, the average down payment on a house is 6% of the total value you’re borrowing. This means, for example, that if you plan on purchasing a $250,000 home, you’d likely need to have a $15,000 down payment ready (on top of closing costs and other fees to keep in mind!).

However, in most cases, it’s not necessary to have that amount of cash ready in order to buy a home. That said, you do need a strategy when evaluating how much money to put down on a house. This might include simply being aware of how to get a zero-down mortgage loan! 

Down payment assistance exists and is a lot more accessible than most people seem to think. But, it’s important to understand that if you are going to opt for a low down payment mortgage or zero-down mortgage loan, you’ll likely have to pay for monthly mortgage insurance depending on your credit score, the loan amount, and a few other factors.

How to Get Around the Down Payment Requirement for a Mortgage Loan

Wanna know the easiest way to get around the down payment requirement for a mortgage loan? Look for one of the two following loans. They’re not available to everybody, but if you meet the requirements then we’d highly suggest looking into them!

VA Mortgage Loans

VA mortgage loans are available to military members who meet the qualifications. If you’re a veteran and you want to buy a home, then VA mortgage loans might be able to help. How?

Currently, the VA mortgage loan limits have no limit, which means you can get a loan to finance a $1 million home if you want to! You still have to meet the requirements to borrow that much money, but regardless of the loan amount, you don’t have to make any down payment.

USDA Mortgage Loans

Not a veteran? That’s okay. If you live in a rural area of America, you could benefit from a USDA mortgage loan.

These types of loans are issued through the USDA Rural Development Guaranteed Housing Loan program as a way to help rural-based and lower income citizens access mortgages they otherwise wouldn’t qualify for. Not only that, though, but they’re zero down payment mortgages!

To qualify for these types of loans, you often have to meet an income limit, but not in the way you might traditionally think. To qualify for a USDA loan, your income can’t exceed a certain amount, as these loans are designed to help those most in need. 

Additional: FHA Mortgage Loans

FHA stands for Federal Housing Administration, and they’re the ones who back these types of mortgage loans, which are designed for homebuyers who have lower-than-average credit scores.

While FHA loans don’t come with a zero down payment, they can make it easier to access mortgage loans for those with credit scores under 580. For example, if you have a FICO score of 580 or more, you can get an FHA loan with just 3.5% down as long as you can show a few documents (such as employment history, tax returns, etc.).

How to Prepare Yourself to Take out a Mortgage Without a Down Payment

If you don’t qualify for any of the loan options listed above but still want to get a mortgage without a down payment then we suggest looking into some Down Payment Assistance programs (also called DPAs if you wanna Google that!). 

The FHA has a section of their website where they’ve organized all of the FHA down payment grants and assistance programs by state. You can find that here, and we suggest browsing through all of the options available.

Another thing we suggest doing is checking and improving your credit score. The higher your credit score is, the better loan options you have. Not sure how to improve your credit?

Sign up to join the waitlist for Cheese’s new credit builder feature. This in-app tool will help you report and track your transaction and payment history so that you can improve your credit score easily for whenever you’re ready to apply for a mortgage loan.

Apply now and join the waitlist for a better financial future, credit score and all.

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