Zero down payment home loans were very common during the housing boom of the early 2000s. Lending institutions and banks had programs for buyers of all types to purchase homes with zero down payment. In fact some mortgage companies were even offering programs where buyers would actually receive cash back at closing of the terms. Apartment complex owners complained that they had difficulty retaining tenants. Many tenants would be able purchase homes despite any credit problems or lack of verifiable employment income. In addition, potential tenants would chose to buy rather than rent. The upfront cost of renting was actually higher than buying since a typical landlord required at least one month deposit and first month rent prior to moving in.
After the recession, zero down payment loans are much less common. Buyers are typically expected to make a substantial down payment and they definitely will not receive cash back at closing. There are some loan programs that give the opportunity for a first time buyer to purchase a home without putting down a large lump sum as a deposit. According to a recent survey, 95% mortgages or mortgages that require 5% down payment are possible for buyers with strong credit and employment history. FHA financing has a 3.5% down payment program for qualified buyers.
However, zero down payment is still possible with niche loan programs. Some banks offer zero down payment home loans for those employed in stable, service sector jobs. These could include teachers, nurses, police officers, etc.. Another example of zero down payment loan programs is the professional loan program offered by BBVA Compass Bank. This program designed for executives or professionals. Practicing physicians or residents, CEOs, attorneys, CPAs and the like, who have high paying jobs, can obtain home loans for zero down payment.
There are also some home loans, sometimes funded by the government, offered to a limited group of people to help them to buy their home with no requirement of deposits. The VA loan is an example, it became known in the 1940s, when President Franklin D. Roosevelt signed the GI Bill to provide veterans and their families with a federally guaranteed home with no down payment. To be eligible for the VA loans, you have to be a veteran who served on active duty and have a discharge other than dishonorable after a minimum service of 90 days or 181 days during wartime or peacetime respectively. National guards, reservists and the surviving spouses of a veteran may be entitled to the loans as well, but there are specific rules concerning their eligibilities. It is estimated at least 25 million veterans and service personnel are eligible for VA financing.