A borrower bought a house with no down payment. Which type of loan is most likely used?

In the scenario where a borrower purchases a house with no down payment, the most likely loan type used is a VA loan. VA loans are specifically designed for veterans and active-duty service members, allowing them to buy homes without requiring a down payment as long as they meet certain eligibility criteria. This feature makes VA loans attractive to those qualifying individuals who may want to conserve their cash for other expenses or investment opportunities.

The absence of a down payment is a significant advantage of VA loans, helping to make homeownership more accessible for military personnel. This characteristic distinguishes VA loans from other types of loans such as conventional loans or FHA loans, which typically require some form of down payment. FHA loans may allow for low down payments, but they still mandate a minimum payment, so they would not apply in a scenario involving no down payment. Conventional loans often necessitate at least a 3% to 5% down payment, thereby excluding them from consideration when no down payment is involved.