Can a First Time Buyer Really Build a Home with Zero Down? Yes! And Repeat Buyers Can Too.

Do You Really Need 20% Down to Buy a Home?

One of the biggest myths about buying a home is that you need 20% down. That is a scary number and incorrect. Did you know that there are all kinds of loans with little to no down payment required? If you are buying the home and going to live in it (owner-occupied) there are several options available.

Overview of Low and Zero Down Loan Options

There are conventional loans (these are not government-backed but are usually less expensive and have stricter requirements), FHA (Federal Housing Authority), VA (Veterans Association), and USDA financing. Conventional and FHA offer loans with as little as 3-3.5% down payment!

You must meet the eligibility requirements for the specific loan program you want to use. Each loan has various requirements based on your:

• credit score
• income
• job history
• reserved funds

and in some cases you must be military or a first time home buyer.

I’m going to go into some detail below, but please call one of our preferred lenders. They can sort through all of this very quickly and let you know which program is the best for you!

How Does a VA Loan Work for Zero Down?

VA loan- If you are a veteran, active military or served your term in the guard, etc, they offer a benefit of ZERO down loans. (please check with the VA for exact terms). The buyer will need a certificate of eligibility to be eligible for this 100% loan. (zero down!!) Once you have a certificate of eligibility, your next step would be to get qualified with a mortgage lender. This is a great loan for veterans! One draw back to this loan is that some homes will not meet the requirements of the VA due to the condition of the property. However, all Hartland Homes are built to meet VA standards.

FHA Loan – Flexible Qualification Guidelines

FHA loan – this is a government backed loan that helps a buyer qualify by having more lenient requirements (debt to income ratios, credit score, funds in reserve). This loan also requires certain standards that an existing home may not meet.

Are Down Payment Assistance Programs Available?

There are various programs that offer:

• down payment assistance
• lower interest rates
• closing costs

depending on your income (usually it cannot be more than a % of the median income) and your first time home buyer status. Keep in mind, if you haven’t owned a home for 3 years, you may be considered a first time home buyer. Some of these programs work with all types of homes and others are only available for a new home or an existing home.

Hartland Homes works with Nebraska Housing Resource to offer down payment assistance for first time home buyers of brand new homes only that qualify with the program requirements. This assistance is grant funded so the amount available depends largely on how much of the fund has been used in the grant cycle. A buyer gets a loan and applies to NHR for the assistance money.

Let’s say that amount is $10,000. On a $300,000 house with 3% down, Tthat would cover all of a buyer’s down payment, so it would be a zero down loan! The buyer would be required to pay this loan off when they sell their house.

USDA Financing – 100% Rural Loans

USDA Rural Development offers 100% financing (0 down) but you must be purchasing outside of the urban areas. (A home in Lincoln would not qualify for this loan) Smaller towns qualify for this type of financing. This loan requires $1000 of the buyer’s own money, but then the rest is taken care of by the loan.

How Does NIFA Help Lower Your Interest Rate or Cash Needed?

NIFA: Nebraska Investment Finance Authority offers lower interest rate loans and home buyer assistance programs. This is a unique program which pairs with your FHA, VA, Conventional or USDA loan to get a lower than market rate. You must qualify based on income, home buyer status, etc. They also offer a down payment assistance program so you can get into the home for almost $0.

How Much Money Do You Actually Need at Closing?

Along with these low down payment loans and programs, Hartland Homes will pay your closing costs when you build in our area and use our preferred lender. What does that even mean?

If you buy a home for $300,000:

• 3% down payment is $9000.
• The closing costs, which are costs incurred when getting a loan on a home, would be roughly $6000.
• You would need $15,000 to purchase this home.

With the down payment assistance and Hartland Homes’ closing cost credit, you would only need the minimum required by the loan – like $1000. That is way less than a deposit + one month’s rent to get into a rental.

You Don’t Need a Construction Loan to Build

Another myth is that you need a construction loan to build a home. When you build with Hartland Homes, we get the construction loan. In other words, you can use the same kind of loan you’d normally use for an existing home. That’s how we make home buying possible!

Our Experience Helping Buyers Overcome Financial Hurdles

We believe everyone should have the opportunity to own a brand new home. This is one of the ways we make that possible. We understand the hurdles our buyers need to overcome financially, so we’ve become experts on how to help them get a down payment, pay their closing costs and make a brand new home a reality.

Conclusion:Can You Really Build for Zero Down?

The short answer is yes — in many cases, you can.

Between first time buyer loan programs, VA and USDA zero down options, down payment assistance, NIFA rate programs, and Hartland Homes paying closing costs, building a brand new home may require far less cash than most people think.

The best first step is simply a conversation.

Visit our Preferred Lenders page to learn more about available programs and preferred lenders.

Browse our Floor Plans to see what’s possible within your budget. Or Contact Us to schedule a no-pressure conversation about your options.

Whether you are a first time buyer or have owned before, we can help you explore what zero down (or close to it) might look like for you.