Have you been searching for “mortgage brokers Colorado” to help you figure out how you can buy a house with little to no money out of pocket? You’ve found your trusted choice in home mortgage with Edge Mortgage Inc. We serve all of Colorado and Wyoming. We remove costly and difficult processes by replacing them with high-quality customer service.
The thought of saving for and/or having a down payment is one of the biggest factors that keep most people from buying a home. What if there was a way to buy a home with little to no money out of pocket? It sounds too good to be true, but it’s possible.
There are a few loan programs available that don’t require a down payment. They are USDA (United States Department of Agriculture) loans and VA (Veteran Affairs) loans.
USDA Loans
With $0 down, USDA loans are great for those who live in rural areas. This area is determined by the USDA and can be found by using their property eligibility map. This loan is for low to moderate-income families and has income limits set by location (county) and number of people in the home. For example, in Weld County income limits for 1 to 4 people in the home is $113,850, and for 5 to 8 people is $150,300.
It is important to know that they do include income from all members of the household over 18 years old, not just the applicant(s) on the loan. If you are eligible, you can buy a home without a down payment and ask the seller to cover the closing costs for you. If the seller is not willing to cover the closing costs, another option is to increase your interest rate and get lender credits or receive a gift from a family member.
It is important to know that USDA loans have very strict debt-to-income guidelines and do require an upfront mortgage insurance premium of 1% that can be financed into the loan. They also require monthly mortgage insurance.
VA Loans
If you’re a veteran of the military or currently serving, a VA loan may be a great option for you. The VA loan provides 100% financing and has some of the most flexible underwriting guidelines. Veterans can get a loan with less-than-perfect credit and higher than average debt-to-income ratios.
VA loans have a required funding fee that is 1.25% to 3.3% of the loan amount and is based on usage and down payment. However, this fee can be financed into the loan. The only way to avoid having to pay the funding fee is if you are exempt due to a service-connected disability. It’s also important to remember that VA loans do not require monthly mortgage insurance.
As with USDA loans, if you are eligible, you can buy a home without a down payment and ask the seller to cover the closing costs for you. If the seller is not willing to cover the closing costs, another option is to increase your interest rate and get lender credits or receive a gift from a family member.
Gift Funds on Traditional Loan
If you aren’t eligible for a USDA or VA loan, there are still other options available. A family member is able to gift you money for your down payment and/or closing costs. Gift funds can also be received from a non-relative that shares a familial relationship with the borrower. This could including a domestic partner, an individual engaged to marry the borrower, former relative, and/or godparent.
Both a conventional loan and an FHA loan allow borrowers to use gift funds for 100% of the down payment. These funds will need to be able to be documented and a letter written to prove they are a gift (and not a loan), but we can walk you through those easy steps.
There is one major rule for gift funds. The donor may not be, or have any affiliation with, the builder, the developer, the real estate agent, or any other interested party to the transaction. We had an issue arise where the borrower’s mother was also the realtor. She was going to gift her commission for the down payment and closing costs. The commission can be used for closing costs, but not for the down payment. The father was able to gift the funds, but not the mother.
Other Low Down Payment Options
Are you unable to qualify for any of the options above? Than there are low down payment options that require much less than the traditional 20% down payment. FHA loans require just 3.5% down and you don’t need perfect credit. For those with good to excellent credit, there are conventional loan options for as little as 3% to 5% down.
Buying a Home with Little to No Money out of Pocket is Possible
Not having a large down payment shouldn’t be the reason you don’t buy a home. We will assist you with finding all available options and helping you find the perfect loan for your perfect home.
Read some of our 5-star reviews from our happy clients
“Absolute wonderful experience. Wouldn’t trust my home-buying to anyone else after the love and care shown to my family’s home-buying effort. If we ever move again I know who I’m working with!” -Alex
“Keri and her team were so incredible in helping my fiancé and I with the purchase of our new home and sale of our old home. We found out we needed to sell in order to purchase. She was able to get our loan process started within hours. Keri was always available when needed and was willing to answer any questions we had. She is very knowledgeable about the process of buying/selling a home. Especially from the financial side and is willing to explain anything! We will certainly be working with her again in the future and would recommend her to anyone!” -Hanna
At Edge Mortgage Inc. we are committed to helping you get the loan that meets your unique requirements while keeping costs to a minimum. We prioritize excellent customer service and constantly exceed expectations.
Edge Mortgage Inc. is located in Johnstown, Colorado, and serves all of Colorado and Wyoming. We offer the loan process made simple and top-notch customer service. We are your trusted Mortgage Lender! Call us today at our Colorado office at 970-744-0000 or our Wyoming office at 307-996-8182.
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