The Federal Housing Administration (HUD) operates five different mortgage programs that qualified individuals can use to get a mortgage that fits their budget. Often, these mortgages do not require a down payment. However, many who qualify do not know the particulars of these programs or how to take advantage of them.
The Department of Veterans Affairs (VA) offers a no down-payment loan for those who have served in the military. These loans are guaranteed by the VA and do not require mortgage insurance. The funding fee can be rolled into the mortgage as well. Interest rates run between 2.15 and 3.30 percent.
Another option for those in the military is a loan through the Navy Federal Credit Union. These loans are similar to the VA loans, but the funding fee is much less.
The US Department of Agriculture (USDA) also offers a guarantee program. Many believe these loans are restricted to purchasing farmland, but they are actually not. They are, however, restricted to specific geographic areas and income amounts. While most who purchase property through the USDA are first-time homebuyers, a small percentage are not.
The last two types of affordable mortgages focus on lowering the down payments homebuyers make. The first is done via private mortgage insurance. This allows borrowers to drop their down payment if they meet the strict credit and income requirements. If they do not, they may qualify for the FHA low down-payment option, which has more fees but is open to more borrowers.