Almost everyone dreams of owning a cozy home at some point in life, and the modern-day financial institutions allow people to realize their dreams. Irrespective of whether you have a poor credit score or are a first-time home buyer, there are plenty of mortgage options available for you. The process of applying for a home loan isn’t as stringent as it used to be, but one factor that becomes a conundrum is the down payment. Traditionally, home loan lenders required the applicant to pay at least 20% of the total amount of the house as down payment; 20% down payment transforms into thousands of dollars, which can interfere with an individual’s wish to have a home of their own.

There are certain home loans that require the applicants to pay low or zero down payment for their dream home. The zero down payment options has been instrumental in helping people become homeowners who otherwise were deterred since they didn’t have enough money to make the down payment. However, in order to find the best no down payment home loans, it is imperative that you choose a reputed and reliable lender or a mortgage broker as they will help you get through the process effortlessly.

Here are certain loan programs that allow prospective home buyers to buy their dream house with no down payment home loans.

VA Loans
These loans are offered by a lender and are guaranteed by the U.S. Department of Veteran Affairs. If you are an active or former member of the U.S. Military, National Guardsmen, or surviving spouses of such members of the defense, you can purchase a house by applying for this no down payment home loan. The good news is that VA loan programs do not set any minimum credit score requirement, and this allows people with low credit score to apply for this particular loan. Also, it is imperative for you to know that though VA loans are available with 100 percent financing and there are no restrictions on the amount you can borrow with a VA loan, there are limits on how much the VA will guarantee.

USDA Loans
The USDA Loans are offered by the U.S. Department of Agriculture to low and moderate income borrowers to build, rehabilitate, or improve their residence that is located in eligible rural and suburban areas. USDA loan borrowers are required to pay an upfront fee of 1% of the loan amount, and this amount is added to the loan balance. The USDA loan borrowers have to pay a premium of 3.05 percent of the loan balance in 2 equal installments every year. With USDA loans, you receive 100 percent financing with no down payment. Though there is no minimum credit score requirement, you are automatically declined the loan if you are currently on nontax federal debt. Also, those loan applicants who have a credit score lower than 640 will have to undergo additional underwriting steps.

Credit unions
Certain credit unions offer their very own zero down payment home loan products, but these no down payment home loans are available only for the members of the particular credit union. So, unless you are the member of the credit union, you cannot apply for the no down payment home loan. If you wish to apply for a no down payment home loan from a credit union, it is imperative that you meet the eligibility requirements and adhere to the underwriting guidelines. Also, the credit score requirement of these credit unions varies according to the particular institution. One such credit union is the Navy Federal Credit Union which offers its members 100 percent financing for purchasing their dream homes.

Special programs
There are certain special programs that allow its members to apply for no down payment home loans. Such special programs are instrumental in helping people from different walks of life apply for loans and brings them a step closer towards becoming a homeowner. For instance, the Doctor Loan Program in which different banks participate in order to offer zero down options to its loan applicants. Doctors, dentists, residents, and students who are just starting out can opt for this program and can avail of such loans even if they have large student loan balances or little money. Also, the down payment for such programs range between zero to ten percent, and no PMI is required.

Though no down payment home loans have empowered people with limited needs to become homeowners, one cannot overlook the fact that a small down payment can help the prospective home buyer save more money in the long run. A down payment brings to the table various advantages as well, and one of them is lower borrowing costs. This will prove beneficial since it reduces the interest charged on the money borrowed. So, if you can pay a minimum of down payment, then you can look for loans that require you to make a meager 3 percent down payment. The bottom line is that before signing the dotted line, you need to conduct extensive research and compare the best home loans to make an informed decision.