The information already provided is consistent with the what I am getting from the banks, and loan officers we work with. Although I am on the east coast (NJ and FL), we work with lenders in many states. Yes, VA and USDA rural can buy with zero down.
There are a few additional comments that I would like to share that might be helpful.
1) There are some grant programs for first time home buyers. The grant amount can sometimes cover part, and in rare circumstances, most/all of your down payment costs. These are local in nature. Look for first time homebuyer programs in your area. Even if you are not a first time homebuyer, RE Pros who service this market are generally the most well versed in this area of grants, and down payment minimums. Some grants may be restricted for only first time homebuyers.
2) FHA does have programs with down payment as low as 3.5%. This guideline for a minimum of 3.5% went into effect January 1, 2009. If anyone indicates to you a requirement amount of 3%, that was the old minimum and it applied up to December 31, 2008. Can you come up with 3.5%? A local RE Pro may be able to discuss options for handling closing costs with you, if you have teh 3.5% and enough reserves in savings.
3) Don't forget the tax credit. Again, you have to be a first time homebuyer to qualify.....defined as not having owned a property within the last 3 years. This program will provide you an $8000 tax credit (not a deduction, a credit) and, providing you occupy your home for 3 years, it does not need to repaid. You need to purchase this year.
4) Rent to own, or owner financing may provide a last alternative. Be very careful with this and make sure understand exactly the terms and conditions. It may be very well worth having an attorney review any documents before you enter into this type of arrangement. Proceed w/ caution. It's not out of the question for this to be viable and a win-win. These offerings are rare, and it's easy to be enticed into a rare offering even if the terms are unfavorable.
I wish I could tell you that there were many options to purchase with zero down. The lenders want some time of investment from the borrower. I hope the alternate suggestions help, also.
Deborah Madey - Broker
Peninsula Realty Group
I'm in Owensboro, KY, so our markets are similar. There are still 2 loan programs available (that I am aware of) that offer 100% financing. First , there is the VA loan, and if you are a veteran it is available to you. If you aren't a veteran, then it is not.
Secondly, there are Rural Housing loans that are available in almost all KY counties (Jefferson and Fayette may be exceptions). The home must be in a county without a city of over 50,000 population (in these counties all areas are acceptable), or in a county that has a city of 50,000 population, the home must be about a mile outside the city limits. That distance from the city limits varies, but the lenders and Realtors in these counties know what areas are acceptable and which are not. These loans are made by banks and guaranteed by the US Gov. There are income limits on these Rural Housing Loans, but they aren't severe.
Good luck on your loan and home hunting.
Century 21 Partners
(270) 993-1109 mobile
Sorry that's probably not the answer you want to hear, but since the mortgage meltdown there is not a lot of faith in buyer's who can't put together even a small down payment