There are very few options left to purchase a home for $0.00 down in today’s market.  I will review the few that I am aware of in this blog!

The first, best, $0.00 down option is the USDA Guaranteed Rural Housing Loan (Section 502).  The USDA Loan is a 30-year fixed rate mortgage with no prepayment penalty and no PMI.  USDA does charge an up-front funding fee and they do have an annual fee that is included in your monthly payments.  The USDA Loan is not eliglible in all areas.  As indicated by the name, the loan is designed to assist customers with moving into what USDA designates as a “Rural” area.  USDA does have an eligibility webiste that you can visit to determine if your County, or portions of your County are eligible.  Despite being $0.00 down, you will still need assistance from the Seller to help you pay for your Closing Costs and Pre-paids.  You will also need some cash out-of-pocket.  Discuss this with your Lender before moving forward with this program.

Another option to purchase a home for $0.00 down is to see if your State provides down payment assistance.  Most States have Down Payment Assistance programs.  These programs will provide you a grant for most of, if not all, your down payment.  In Ohio, we have the Ohio Housing Finance Agency (OHFA).  They offer “Grants for Grads,” “First Time Homebuyer Grants,” and Grants for “Heroes,” to list a few.  You can visit http://www.OhioHome.org for more information regarding the State of Ohio’s grant programs.

Another option to purchase a home for $0.00 down is to see if your local market has County Grant Programs.  Some Counties provide down payment assistance programs.  These programs may also include an amount to assist you with improving the home.  In my County, Columbiana County, we have the “CHIP” Program.  This program provides you with 10% down payment assistance as well as up to $10,000 towards repairs they deem necessary.

While the USDA Loan Program has no ‘catch,’ the State and County programs do have a ‘recapture clause’ that is included in the grant.  In some cases this recapture includes a 2nd Mortgage that is filed on the home.  In other cases, this recapture has no effect on the home loan or the home itself unless you sell before “X” number of years (usually 5-years or 10-years).

I hope that you find this information helpful, please don’t hesitate to visit our website at http://www.HonestLending.net and ask any questions that arise or ask us for a second opinion!