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Mortgage Loans With No Down Payment

Performance Property Real Estate Question

Q: Can I get a mortgage loan to buy a house without a down payment? Tara, Scotch Plains, N

A: Most conventional and FHA mortgage loans require a down payment however there are 2 types of mortgage loans that do not require a down payment: 1. USDA & 2. VA mortgage loans. Beyond a down payment, there are fees and closing costs associated with getting a mortgage loan, but a borrower can use gifts to offset those costs. USDA (United States Department of Agriculture) mortgage loans offer mortgage money to borrower buyers in rural areas and require no money down on the purchase of a property. Gift funds can be used to pay for some or all of a USDA mortgage loan’s closing costs. This gift money cannot be used as financial reserves to help a USDA borrower make mortgage payments. Gifts for a USDA loan can come only from family members, employers, a labor union, a charitable organization, or a homeowners assistance program.

Like USDA loans, borrowers are not required to make a down payment when applying for a VA (Veteran’s Affairs) mortgage loan. Borrowers can use gift funds to make a down payment or cover the closing costs for a VA mortgage loan. VA loan borrowers can also use gift money to pay for the funding fee that is often required with a VA mortgage loan. Thanks for your question, Tara.

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