Why are you scrimping and saving, clipping coupons and skipping meals, forgoing vacations, and being extra nice to wealthy relatives in hopes that they might “loan” you a few thousand or remember you in their wills so you can make the down payment on your first experience buying a home?

Are you nuts?

Don’t you know that governments at every level—federal, state, and local—can’t wait to help you get a mortgage without a down payment? If you’re a first-time buyer with good credit and average or slightly less than average income, you’re a perfect candidate for a government down payment assistance program. Ain’t this a great country?

The US Department of Agriculture program

Let’s start at the top, in Washington, D.C. The U.S. Department of Agriculture (USDA) guarantees and funds about 170,000 loans a year to families who make up to 115 percent of the median annual income where they live. Borrowers must be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.

You don’t even have to be a farmer or live in the sticks to qualify for a USDA mortgage. You can live in one of hundreds of small towns, nice suburbs, and even resort destinations. It gets even better. As of October 1, the feds have $24 billion available for loans at market interest rates with no down payment. Hurry before the money is all gone.

VA housing loans

Then there’s the popular VA housing loan for veterans. If you served 90 days on active duty or with the Reserve or National Guard—or even if you are a surviving spouse of a serviceperson—you may qualify for a VA-guaranteed loan that will cover up to half the cost of your mortgage, depending on the amount your borrow and where you live. Learn more about VA loan eligibility.

VA loans can be used to refinance an existing mortgage as well as rehab or repair a home. However, a down payment will still be required for the balance of the loan if you’re using the VA program to buy a house—meaning that it’s not quite as good a deal as the USDA program.

Local options for no down payment loans

Look locally and you’ll find a whole new range of little-known gems of the no down payment mortgage world. For many years, local community leaders have known that one of the biggest barriers that is keeping earnest, hardworking, bill-paying, home-owning families like you from moving to their communities and buying a home is a down payment.

To improve their workforce housing picture, state and local governments have set up programs to guarantee mortgages for credit-worthy borrowers through local lenders.

The lender is happy to make the loan because he knows he is going to get repaid either by the borrower or the government. Because he has incurs no risk, he agrees not to require a down payment. If borrowers pay back the loans, the local government doesn’t lose a penny, which is why good credit and the ability to repay are critical to qualify. It’s a win, win, win.

There are literally thousands of down payment assistance programs available locally across the nation. Nearly all of these programs have income limits and are limited geographically. Many of these programs are very local in nature, so it’s hard to find out if the home you want to buy qualifies. Some have special limits, and are available only for foreclosed properties or public employees, for example. Some have such a low profile that they have down payment-free loans that go begging.

The Down Payment Resource (DPR)

Why doesn’t someone put all these thousands of down payment programs together on a single website so that you can easily find out what’s offered and where? Actually, someone has. It’s called Down Payment Resource (DPR). Developed by a company called Workforce Resource, it links eligible buyers with government-funded programs for down payments, affordable mortgages, and rehab loans.

Unfortunately, DPR is currently only available in seven metropolitan areas or regions served by multiple listing services (MLS) that carry the service. On property listings from those MLSs that have DPR, a special icon displayed right on the listing indicates that the home is eligible for one or more down payment assistance programs. Homebuyers can click on the icon and answer eight simple questions to determine if they qualify. Real estate professionals can quickly access details about the assistance programs.

If your Realtor doesn’t know about DPR, tell him or her to call the MLS and get with it. Do your homework with your state, county, and municipal housing authorities to identify programs for which you might be eligible. Work with a Realtor who is up to speed on local down payment programs and who knows the lenders who participate in them.

With the help of down payment programs like these, you could be in your own home before the end of the year with cash left over from your down payment savings to cover closing costs, moving expenses—and maybe even some new furniture.


Steve Cook is editor of Real Estate Economy Watch and covers real estate and mortgage finance for leading news sites.  He is a member of the board of the National Association of Real Estate Editors and was twice named one of the 100 most influential people in real estate. Cook was vice president for public affairs for the National Association of Realtors.