How to Buy a Home With a Low or No Down Payment in Nevada County

How to Buy a Home With a Low or No Down Payment in Nevada County

April 2, 2025

How to Buy a Home With a Low or No Down Payment in Nevada County

For many buyers, the down payment feels like the biggest obstacle to purchasing a home. The good news is that qualified buyers may not need the traditional 20% down.

VA and USDA loans can offer zero-down financing, while FHA and certain conventional programs may allow relatively low down payments. Assistance programs, gift funds and seller concessions may also help reduce the amount you need at closing.

These programs have different eligibility requirements, costs and restrictions, so the right place to begin is with a knowledgeable lender who can review your complete financial situation.

Does Zero Down Really Mean No Money Out of Pocket?

Not necessarily.

A zero-down loan means the program does not require a down payment. Buyers may still need money for:

• Closing costs

• Inspections

• Appraisal fees

• Prepaid property taxes and insurance

• Earnest-money deposit

• Moving expenses

• Immediate repairs

• Financial reserves

Some of these expenses may be covered through negotiated seller concessions, lender credits, assistance programs or allowable gift funds. However, buyers shouldn’t assume they can purchase a home without having any savings.

VA Loans

VA financing can be an excellent option for eligible veterans, active-duty service members and certain surviving spouses.

Potential benefits include:

• No required down payment in many cases

• No monthly private mortgage insurance

• Competitive loan terms

• Limits on certain borrower-paid costs

A VA funding fee may apply unless the borrower qualifies for an exemption. The property must also meet applicable VA requirements, and buyers need sufficient entitlement and lender approval.

VA financing is generally intended for a home the borrower will occupy as a primary residence—not a conventional investment-property purchase.

USDA Loans

The USDA Single Family Housing Guaranteed Loan Program may provide zero-down financing to qualified buyers purchasing an eligible primary residence.

Eligibility depends on several factors, including:

• The property’s location

• Household income

• The borrower’s credit and repayment ability

• The property meeting program requirements

• Intended use as a primary residence

Some Nevada County properties may fall within USDA-eligible areas, but eligibility should be checked for the specific address. Area maps and program limits can change, so a buyer should not rely solely on the property’s rural appearance.

USDA loans also include program fees that should be included when comparing the complete monthly payment.

FHA Loans

FHA-insured financing may allow qualified borrowers to purchase with a relatively low down payment. It can also provide more flexible underwriting than some conventional programs.

FHA loans are not limited to first-time buyers, although they are commonly used by people purchasing their first home.

Important considerations include:

• Credit and lender qualification requirements

• Upfront and ongoing mortgage-insurance costs

• FHA property standards

• Primary-residence requirements

• Loan limits applicable to the property and county

Rather than focusing on a single advertised credit-score threshold, buyers should have a lender review their complete credit, income, debt and available funds.

Low-Down-Payment Conventional Loans

Certain conventional loan programs may allow qualified buyers to purchase a primary residence with a relatively low down payment.

Conventional financing may be attractive because mortgage insurance can sometimes be removed after the borrower meets applicable equity and loan requirements. The cost of mortgage insurance and the interest rate will depend on the buyer’s qualifications and loan structure.

Some programs have income, occupancy, property-type or first-time-buyer requirements. A lender can compare the conventional options with FHA, VA and USDA financing.

Down-Payment Assistance Programs

California buyers may have access to assistance through organizations such as the California Housing Finance Agency or Golden State Finance Authority. Individual lenders may also offer their own programs.

It’s important to understand what “assistance” means. Depending on the program, it may be:

• A grant

• A forgivable loan

• A deferred-payment subordinate loan

• A repayable second mortgage

• A lender credit with different pricing or terms

Assistance is not always free money. It may need to be repaid when the home is sold, refinanced or paid off. Programs may also have income limits, purchase-price limits, approved-lender requirements or homebuyer-education requirements.

Availability and terms change, so buyers should verify current information with an approved participating lender.

Other Ways to Reduce Upfront Costs

Seller Concessions

Depending on the market, offer terms and loan program, a buyer may negotiate for the seller to contribute toward allowable closing costs.

Concessions are subject to lender and program limits. They generally cannot be used as cash back to the buyer, and an offer requesting a large credit may be less competitive.

Gift Funds

Many loan programs permit eligible gift funds from approved sources. The lender will normally require documentation confirming where the funds came from and that they are truly a gift rather than an undisclosed loan.

Lender Credits

A lender may offer a credit toward closing costs, sometimes in exchange for a higher interest rate. Buyers should compare the immediate savings with the potential long-term cost.

Owner-Occupied Multi-Unit Properties

Some buyers purchase a two-to-four-unit property, occupy one unit and rent the others. This is sometimes called “house hacking.”

Financing requirements vary, and projected rental income may not be counted exactly as a buyer expects. Buyers should also consider vacancy, repairs, landlord responsibilities and whether the property’s units are legally permitted.

How Much Cash Will You Actually Need?

The answer depends on much more than the advertised down-payment percentage.

Before making an offer, ask your lender for a written estimate showing:

• Required down payment

• Estimated closing costs

• Prepaid taxes and insurance

• Mortgage-insurance costs

• Estimated total monthly payment

• Required reserves

• Assistance repayment terms

• Funds needed at closing

Buyers should also preserve enough money for inspections and unexpected expenses after the purchase.

The Bottom Line

Purchasing a home with a low or no down payment may be possible, but the best financing option depends on the buyer, property and current program requirements.

A strong first step is to speak with a qualified lender before assuming that a large down payment is necessary—or that zero-down financing means no cash will be needed.

If you’re considering buying a home in Nevada County, I’d be happy to help you explore suitable properties and connect you with a trusted lender who can compare the financing programs available to you.

Evan Glasco
REALTOR® | DRE Lic. 02209690
Residential & Commercial Real Estate
Coldwell Banker Grass Roots Realty
530-635-2521
EvanSellsRealEstate@gmail.com
EvanSellsRealEstate.com