What are Zero-Down Payment Mortgages?

Many people believe that buying a house or getting a home loan means making a sizable down payment. A mortgage broker may have even told you that in order to get favorable mortgage rates, you need a down payment of 20 percent. But this simply isn’t true.

For years, mortgage lenders offered 0 percent down payments for some mortgages. That largely changed when the housing bubble burst. Home loans became increasingly harder to obtain as mortgage lenders tightened their belts. But with the economic outlook brightening in North Carolina and the broader country, you can still obtain a zero-down payment mortgage if you meet certain requirements.

Zero-Down Payment Veterans Administration Loans

While many mortgage lenders stopped offering zero-down loans some time ago, the Veteran Administration (VA) never stopped. A VA home loan may be obtained by active service members, veterans, and eligible surviving spouses. While VA loans are provided by private lenders, the VA guarantees a portion of the loan in order to get you more favorable terms – including no down payment.

North Carolina is home to eight military bases. Thousands of members of our armed forces from the Army, Navy, Air Force, and Marines call North Carolina home. Fort Bragg, one of the largest military complexes in the world, is located just northeast of Fayetteville. It’s a little over an hour south of Raleigh and less than three hours from Charlotte. So if you live in North Carolina and have history of military service, you may qualify.

Obviously, a zero-down payment loan from the VA isn’t for everyone. You have to be active duty, retired military, or an eligible spouse. Your length of service, duty status, and character of service are all determining factors of eligibility for a VA loan. Loans are only for a home that you occupy or a home that your spouse or dependents occupy if you’re active duty.

Your credit also needs to be satisfactory, and your income needs to meet your expected payment. You’ll also need to obtain a Certificate of Eligibility (COE), but we can help you with that. If you do meet the requirements, you’ll be able to obtain a loan without any money down and without paying for expensive outside insurance. The VA acts as the insurer and guarantees the loan. If you can’t make the payments, the lender goes to the VA who covers any losses that may occur.

Many active military fall in love with North Carolina and choose to retire here. In fact, Kiplinger listed Charlotte as one of the top five cities in the country for people to retire due to its low cost of living and easy access to healthcare. Add a low-cost home loan, and it’s even more ideal.

Zero-down Payment Mortgages in North Carolina

Zero-Down Payment Loans from the United States Department of Agriculture

The military isn’t the only government organization helping people get zero-down payment home loans. The U.S. Department of Agriculture (USDA) offers several options for getting a home loan if you’re interested in living in a rural area. The Single Family Housing Guaranteed Loan Program is designed to assist your mortgage broker in offering low to moderate income families purchase a home.

Like the zero-down VA loan, you’ll have to personally occupy the home. You’ll also have to be a U.S. citizen, national, or Qualified Alien. Additionally, you cannot have been suspended or debarred from participating in federal programs. There are several other requirements as well, such as meeting income eligibility and purchasing a home within eligible designated areas.

Eligibility can be tricky, but the USDA has taken some of the guess work out of it with an eligibility map. You can enter in the address for a home you’d like to purchase and see if it qualifies. The USDA also offers an income eligibility document. If you find it confusing, visit your mortgage broker to discuss your eligibility rather than trying to figure it out for yourself.

Many people choose to live in rural areas outside of larger cities. Charlotte, for instance, has a vibrant downtown community with music and restaurants. You can have access to all the amenities of the city while living in one of the many rural communities that surround it.

Check with us to see if you qualify for one of these or other zero-down payment loans today!