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No Money Down Payment Home Loans

couple holding house and key

Many residents hope to own a piece of paradise, but home prices in Hawaii can be staggering to some. Many write off homeownership because they assume they can never purchase a home without a large down payment.

Buying your first home is a big step, and there are several opportunities for homebuyers with little money for a down payment. Here are three options for borrowers seeking zero-down-payment home mortgages:

Combo Programs

Using the combination (also known as “Combo”) of a first and second mortgage is a great option because a Combo folds the benefits and risks of each type of mortgage into one package. You apply for two loans from the same lender. The first loan provides funds for 80 percent of the total amount of money you need, and up to 20 percent of the purchase price comes from the second mortgage loan, for up to 100 percent financing of a home. One of the most beneficial aspects of utilizing a Combo program is that the borrowers are not required to pay Private Mortgage Insurance (PMI), which is typically required by lenders when there is less than 20 percent down payment. So a borrower saves hundreds of dollars each month by not paying for this insurance!

Check with your financial institution to find out what types of Combo Loans are available. Because they are flexible and help finance up to 100 percent of your home, they are often ideal for many first-time homebuyers. Be sure you are well-informed of the interest rates on both loans, as they often vary.

VA Loan

If you are an active-duty service member, reservist, veteran or eligible surviving spouse, the VA can help you become homeowners. According to Vets.gov, approximately 90 percent of VA-guaranteed loans are made with no down payment.

VA Home Loans are provided by private lenders, such as financial institutions and mortgage companies. The VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms, including competitive interest rates and no down payment or PMI requirement.

U.S. Department of Agriculture’s (USDA) Rural Development

The USDA partners with approved lenders to offer 100 percent financing to eligible borrowers to purchase property in designated rural areas. Rural Development loans are not confined to only farmland, per se, but include many lower density residential communities throughout the islands. This program is specifically meant to assist first-time low-income to moderate-income homebuyers with competitive interest rates and loan terms.

The USDA mortgage loan does not require a down payment. However, USDA mortgage loan has a 1 percent upfront guarantee fee which can be rolled into the loan amount. Learn more by contacting the USDA Rural Development in Hawaii.

Buying your first home is a big step. Don’t worry if you do not qualify for the examples above. While you may not be eligible for a zero down payment mortgage, there are other low down-payment (approximately 3 percent) options such as a First-Time Homebuyer Program.

If you are unsure about how to choose the right mortgage, reach out to a trusted Mortgage Loan Officer, and they will be able to break down the options and guide you through every step of the process, making your dreams of owning your first home a reality.



Financial Educator, Jennifer Russo headshot

About Jennifer Russo

Jennifer Russo is Hawaii State FCU’s financial educator. She develops, markets and delivers financial resources to members under the credit union’s financial literacy initiative. She also works with community partners to develop strategies addressing the unique needs of Hawaii’s diverse population.

Jennifer has more than 15 years of experience in marketing and program management within the federal government and private industries. She received her Master of Business Administration from Colorado State University in Fort Collins, Colorado, and holds a bachelor’s degree in mass communications and public relations from McNeese State University in Lake Charles, Louisiana.

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