Unlocking Homeownership: FHA 100 Financing 0 Down Payment Mortgage (2024)

Direct Mortgage Loans is excited to announce that eligible homebuyers can now take advantage of 100% FHA financing down payment assistance program, which means you can qualify for a FHA loan with no down payment required. To learn more about how this down payment assistance program works, including eligibility criteria and how to apply, keep reading and reach out to one of our expert Loan Officers!

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Understanding FHA Loans

FHA loans are backed by the Federal Housing Administration (FHA), a government agency under HUD. FHA loans offer flexible guidelines for borrowers who have limited funds for a down payment and/or have a low credit score. Specifically, the 100% FHA Loan Program is a type of down payment assistance (DPA) loan that provides eligible homebuyers with 100% financing, requiring no down payment.

How does the down payment assistance program work with FHA 100 Financing?

This program enables homebuyers to obtain 100% financing without having to make a down payment. This is achieved by combining a 1st and 2nd mortgage and is compatible with FHA loans. The 2nd mortgage can be up to 3.5%, based on the lesser of the sales price or appraised value, and has a 10-year term.

FHA Down Payment Assistance Key Benefits

The 100% FHA Loan program has helped over 48,300 individuals in buying homes by providing $417 million in down payment assistance. Notably, it stands out by requiring no down payment, making it accessible to buyers across various income levels. Unlike some programs, being a first time homebuyer is not a prerequisite; it is open to anyone meeting the eligibility requirements. Moreover, individuals with less-than-perfect credit are welcome, and there is no maximum debt-to-income ratio.

The second mortgage component of the program features a competitive ten-year term interest rate. Non-Occupant Co-Borrowers are welcomed without restrictions. Additionally, there are both amortized and forgivable options for the second lien, providing borrowers with repayment flexibility.

FHA 100 Financing Eligibility 

To participate in the program, you need to meet certain requirements, including a minimum FICO credit score of 620. Apart from this, you must also complete a Homebuyer Education course, which aims to educate you about the home buying process. The types of properties that qualify for financing include single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.

Applying for 100 FHA Financing No Down Payment Home Loans

To apply for the 100% FHA Financing Loan Program, complete the following steps:

• Apply through a Participating Lender
  • Direct Mortgage Loans is a participating lender and can walk you through the process.
• Verify Eligibility & Obtain Pre-Approval
  • We can assist you in verifying eligibility and obtaining pre-approval if you qualify for the program.
• Complete Homebuyer Education Course
  • At least one borrower must complete a Home Buyer Education Course.
• Close on Your New Home
  • Once you have been approved and completed the required Homebuyer Education course, you are set you close on your new home.

Alternative Home Loans with No Down Payment

In addition to the 100% FHA loan program, there are alternative programs available that offer no down payment. Here are some different types of home loans:

USDA Loans

USDA Loans designed to assist low to moderate-income buyers in rural areas. No down payment is required, and these loans generally have lower interest rates than Conventional loans. However, specific income and property eligibility restrictions may apply.

VA Loans

VA loans are a type of mortgage that is available only to military personnel, veterans, and surviving spouses. These loans are backed by the Department of Veterans Affairs (VA) and do not require a down payment. They can be used to either purchase a primary residence or refinance an existing mortgage.

Down Payment Assistance Programs

There are several programs available to help eligible buyers with their home purchase. These programs provide down payment and/or closing cost assistance in the form of grants, loans or both, depending on the specific program. Find a Down Payment Assistance Program available through Direct Mortgage Loans, in your state!

FAQs About FHA 100 Financing No Down Payment Home Loans

Is FHA 100 Financing available to first time homebuyers only?

There are no income or first-time home buyer requirements for this program. However, eligible individuals are required to complete a Home Buyer Education Course.

Can I use FHA 100 Financing for any type of home?

The FHA 100% Financing program offers a wide range of options when it comes to the type of homes that are eligible for the program. You can use this financing option for single-family homes, whether they are detached or attached, duplexes, manufactured homes, planned unit developments (PUDs), townhouses, and condominiums.

What is the minimum credit score required for FHA 100 Financing?

To qualify for FHA 100% Financing, a minimum credit score of 620 is required, although this requirement might vary based on the specific lender.

Can FHA 100 Financing be used for purchasing investment properties?

The FHA 100% Loan Program cannot be used for the purchase of an investment property and can only be used for primary residences. Nevertheless, Direct Mortgage Loans offers a range of Non-QM loans tailored to non-traditional borrowers, that offer alternative financing solutions.

Are there restrictions on the type of home I can purchase with FHA 100 Financing?

There are no strict restrictions on the type of home you can buy under this program. FHA 100% Financing allows the purchase of various property types, including single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.

What makes FHA 100 Financing a suitable choice for those with limited savings?

FHA 100% Financing is a great choice for those with limited savings. With no down payment, income limit, or first-time homebuyer requirement, this program offers a straightforward path to homeownership.

What is the maximum loan amount for FHA 100 Financing?

The maximum loan amount for FHA 100% Financing program is based on the conforming loan limits set by the Housing of Urban Development (HUD). Specifically, for FHA borrowers in low-cost areas, the maximum loan limit is set to $$498,257 in most areas, and $1,149,825 in high cost-areas. Special exception loan limits in Alaska, Hawaii, Gaum, and the U.S. Virgin Islands cap single-family home loans at $1,724,725.

Are there income restrictions for FHA 100 Financing?

The FHA 100% Loan program does not impose any income restrictions, making it accessible to a broader pool of potential buyers. The absence of income limitations increases eligibility, providing an inclusive opportunity for more individuals.

Can I use FHA 100 Financing for a manufactured or mobile home?

The FHA 100% Loan Program can be used to finance manufactured or mobile homes. However, this only applies to double or triple-wide homes.