You may have heard that a 0% down loan is no longer available. However, this is not true. There are two 0% down loan options: VA loans and USDA loans.
Created in 1944, the VA loan helps military veterans and their families become home owners. Many military families have trouble qualifying for conventional loans because of the tough requirements for credit and down payments. However, with a VA loan, they can often become homeowners.
Here are some points about VA loans that may be of interest.
You may be wondering why everyone doesn’t jump at the chance to get a 0% down loan with all these benefits. The truth is that not everyone can qualify for a VA loan. The VA Loan is specifically for those who are or have been in the military. To be considered for this 0% down loan, you must have:
In addition to military qualifications, you will also have some financial qualifications to consider. Although the VA doesn’t set an income level or debt ratio like a conventional loan, they do need you to have sufficient income that can cover your new mortgage loan payment.
To determine this, the VA looks at something they call residual income. This is often known as discretionary income and is the money you have left over at the end of the month. There are many monthly items, however, that are not considered when determining discretionary income, such as utilities and groceries.
To determine all the qualifications needed to be approved for a VA loan, check out the VA website.
The USDA’s Rural Housing Service offers a 0% down loan known as the Section 502 Direct Loan Program. This program helps lower income home buyers find a home in specific rural areas throughout the United States.
To qualify for this 0% down loan, you must have the following:
Additionally, only certain homes qualify for the USDA loan program. The house must:
If you’d like help finding a home that qualifies for a 0% down loan or to discuss other loan options, give us a call. We’d be happy to locate USDA approved houses or direct you to recommended mortgage brokers in the area.