How to buy a home with almost no down payment

Several nonprofit organizations offer programs for middle-income buyers.

by Myles Biggs

However, the truth remains that as the Federal Reserve tapers their stimulus spending and mortgage rates begin to return to healthy market levels, lenders will focus more on home buyers and less on those people looking to capitalize on low refinancing rates.While mortgages are slowly getting easier to obtain, the housing market is still far from pre-recession borrowing levels and many would-be home owners are still trapped in rental situations. Pair this fact with the media’s fixation on rising mortgage rates and the spirits of many potential home buyers have been anything but high.

Nonprofit Assistance

Conventional loans, which are the least-expensive but hardest to qualify for, require a minimum down payment of at least five percent. Federal Housing Administration (FHA) loans, which are typically easier to get and thus popular with first-time home buyers, require a down payment of around three percent. However, these FHA loans require some type of mortgage insurance and are becoming more expensive.

So while the thought of buying a home without needing a down payment may seem like a faint dream of years past,  there are several groups that have rallied around helping middle-income buyers get past their down payment barrier.

How can you qualify for assistance from one of these groups? Some of the programs, like the “Good Neighbor Next Door” program from HUD work towards helping public servants like teachers and law enforcement officials. For military personnel and their families, programs are available from the Department of Veterans Affairs and The Navy Federal Credit Union. Still, some programs focus more on your location, like loans from the USDA which cater to buyers in rural areas.

Programs Near You

While some of the programs mentioned above are taking place on a national scale, your local community may also have programs in place for housing assistance. As you begin shopping around for the best mortgage rates and speaking with various loan officers, be sure to ask about any available programs that can help you get past the hurdle of a large down payment.

An article, published written last week by MSN Money, goes into greater detail on this subject and even offers links to several helpful tools and additional information.

Did you receive assistance in buying your home? Tell us about your story in the comments section below.