Real Estate Affordability November 27, 2021

Build A Home with Little to No Money Down

Buying a home can be nerve-racking, especially when you consider the costs at the beginning of the process, with most home loans requiring a down payment of between 10-30%. Not to mention the various fees that come with it. For many buyers, this may feel like homeownership is out of reach.

Thankfully, using government loans administered by the Federal Housing Administration (FHA), the US Departments of Agriculture (USDA), and the US Department of Veterans Affairs (VA) offer money-saving alternatives. All three loans facilitate homeownership with little to no money down. For some buyers, it allows them to build a home for less than the cost to buy an existing one.

Federal Housing Administration (FHA) Loans

Government loans administered by the FHA are perfect for first-time homebuyers. This is because they have some of the most lenient eligibility requirements out of any home loan available, and great benefits as well. These benefits include:

  • Low down payment of 3.5%.
  • Lower monthly mortgage costs.
  • Low closing costs.
  • A credit score of 580 and lower (depending on the lender) is still eligible.

These home loans also allow applicants who have gone through financial difficulties in the past to be eligible. Applicants who have gone through a Chapter 7 bankruptcy will qualify for FHA home loans. Their only requirement is that the loan application is made two years from their bankruptcy discharge date. Chapter 13 bankruptcy recipients can also be eligible for the loan. They only need to have one year of making bankruptcy payments and rent on time and court approval.

These loans are for the purchase of single-family homes and multi-family homes of up to four units, as long as the applicant plans to occupy all or part of it primarily. Also, these loans can finance the purchase of FHA-approved condos, townhomes, manufactured homes, and mobile homes as long as they meet the requirements dictated by the FHA.

US Department of Agriculture (USDA) Loans

Created for lower-income families who wouldn’t have otherwise been able to purchase a home, USDA loans are meant exclusively for rural communities. Eligibility for these home loans requires that the applicant make an income at or below the county’s low-income limit.

These loans also require that the property applied for is a modest single-family home with no extra amenities like an in-ground pool. Properties can’t be for any business purpose whatsoever. On average, USDA loan limits vary depending on the count, population and it’s cost of living.

Once eligibility is confirmed, the applicant will be able to enjoy USDA loan benefits. Including a no down payment requirement, competitive interest rates, flexible credit score requirements, and low mortgage insurance payments.

Department of Veterans Affairs (VA) Home Loan

Government loans by the VA are some of the best home loans available. However, they are exclusive to Veterans, Active Duty Service Members, and eligible military spouses. The applicant must also meet all other VA eligibility requirements, which include military service, property, income, and credit score requirements.

Once an applicant qualifies, they will enjoy some of the best benefits out of any home loan available. These include:

  • $0 down payment requirement
  • Low monthly mortgage payments
  • Low monthly interest rates

These home loans are for single-family homes, multi-family dwellings of up to four units, townhomes, manufactured and double-wide mobile homes on a permanent foundation, and VA-approved condos.

Moreover, since January 1st, 2020, VA home loan recipients are no longer subject to loan limits on their first VA home loan. The only limitation for applicants is how much they can afford and the lender limit. Some lenders are offering $0 down for up to $5 million dollars. However, for applicants with more than one active home loan, the loan limits vary depending on the county where the property is located.

What’s Holding You Back?

Building an affordable custom home is entirely possible with the use of government-guaranteed home loans.

To start the process, you will need a loan approval, vacant land to purchase and an approved builder. Generally, the process van be completed in less than 5 months.

Their most significant incentives being their lower eligibility requirements and their great benefits. Lenders are also willing to be more lenient on their eligibility requirements because they get protection from the government against financial loss.

Phil Georgiades is the CLS for, an affordable home ownership advocate since 2012.  For more information or to apply for a home loan, call us at (877) 432-5626.   For additional real estate inform action call Paul Burrowes at 831-295-5130.