Want to buy a home, but don’t have much cash?
Two government programs can help you make a minimal down payment.
You can still get 100% financing if you can qualify for a VA loan.
Veterans, including members of the National Guard and reserve units, soldiers on active duty, and widows whose spouses’ deaths were war-related are all eligible for these government-guaranteed mortgages.
The Department of Veterans Affairs repays the bank if borrowers default, making these loans cheaper and easier to obtain.
VA loans also have the most lenient requirements for income and credit score of almost any type of mortgage. The government doesn’t set minimums, but lenders could accept credit scores as low as 580 and debt-to-income ratios as high as 41% of pretax income.
Can’t qualify for a VA loan?
An FHA loan is your next best bet. Obtain one of those and you’ll only need 3.5% of the purchase price.
In this case the Federal Housing Administration guarantees the mortgage will be repaid, so the lender won’t lose money if you default on your loan.
As with VA loans, that makes lenders willing to take on borrowers they might have rejected, or charged a higher interest rate.
Even a bankruptcy won’t disqualify you from VA or FHA loans as long as it occurred at least two years ago and you’ve been paying on time ever since.
Most lenders participate in the VA and FHA programs. They know what to do.