The number one obstacle when it comes to buying a home for most Americans is lack of down payment. We know saving for a down payment can seem daunting, but at Treadstone, we offer numerous loans with low down payment options, and even a couple with zero down payment! Our team can help you find the right program for you and make your dreams of homeownership a reality.
Which programs can I buy a home with no money down?
RD (Rural Development) Loans, also known as USDA loans, are reserved for primary residences in rural areas. Some general requirements for RD loans include:
- Location of the property
- Household income and asset limits
- Home must be the buyer’s primary residence
VA Loans are reserved for veterans and active duty service members, as set by the Department of Veterans Affairs. Some general requirements for VA loans include:
- Valid COE (Certificate of Eligibility)
- Home must be the buyer’s primary residence
What Michigan loan programs offer little money down?
Conventional loans and FHA loans offer down payments as little as 3% and 3.5%, respectively.
FHA loans are backed by the US government (like both USDA and VA loans) and are a great option with flexible eligibility requirements. FHA loans are for primary residences only and may be well-suited for borrowers who have a lower credit score and need credit flexibility.
Conventional loans are the most common home loan type in Michigan. Conventional loans are the most versatile form of home loan, and are useful in a variety of situations. To qualify for the lowest down payment option, buyers must fall within the income limit set for the specific geographical area or be a first-time home buyer.
Is a zero down payment home loan right for me?
The answer to determining your down payment amount is dependent on your personal financial situation! Home buyers who would like to expedite their home purchase find a zero down payment option useful or necessary.
Your down payment amount directly impacts several aspects of your loan— monthly mortgage payment, mortgage insurance, and maximum approved loan amount to name a few. Your Treadstone Loan Officer can help decide if a zero down payment loan is right for you!
Benefits of zero down payment home loans:
- Saves more money in bank short-term
- May be able to purchase sooner rather than later
- Use savings for immediate repairs, renovations, or furnishing
Things to consider with zero down payment home loans:
- Zero-down mortgages usually have can have higher interest rates depending on the loan program
- Higher monthly mortgage payment, due to a larger loan amount
- PMI (private mortgage insurance) is required on most loans with under 20% down payment
What is the minimum down payment for first-time home buyers?
Depending on the Michigan loan program you qualify for, the minimum down payment can range from 0% to 3.5%. Your Loan Officer will help you determine the right program for you! Until then, check out more information for first-time buyers.
What other resources exist for first-time home buyers?
In Michigan, first-time buyers have a couple of unique programs available.
One of the perks is the Michigan First-Time Buyer Savings Account. This is a tax-free savings account for future homeowners, like an HSA or 529 education savings account. All money contributed to this bank or brokerage account will grow and be saved without any state taxes due on its balance or contributions. For more information, read our guide to Michigan’s FHSA.
Another perk for Michigan home buyers is MSHDA, a down payment assistance program from the Michigan State Housing Development Authority. Eligible buyers could receive $10,000 in down payment assistance funds that can be used for closing costs, pre-paids, and the down payment itself. MSDHA requires a 1% minimum down payment from the borrower and is a second loan on your home with 0% interest. These funds can be used for the down payment and/or closing costs. Additionally, MSHDA’s down payment assistance is only available on homes priced under $224,500. To see if you qualify and for more information, contact one of our Michigan Loan Officers!
I would like to put down as little as possible; what program is best for that?
There are several loan programs that require little to no down payments. Contact your Loan Officer to see what program you may qualify for and that fits your needs best. Keep in mind that all home purchases have closings costs and prepaid costs in addition to the down payment.
- Rural Development (RD) – 0%
- Veterans Affairs (VA) – 0%
- FHA – 3.5%
- Conventional – 3% – 5%
- Michigan State Housing Development Authority (MSHDA) – 1%
Can I buy a home with no money down and bad credit?
The simple answer: it depends! At Treadstone, you’re more than your credit score, and our Loan Officers can work with you on your unique situation.
Can I buy a second home with no money down?
Options are limited, but we love to get creative. Some programs may allow you to purchase a second home with little money down, but since each person’s scenario is unique, there’s no one-size-fits all. Drop us a line and we’ll do our best to work something out!