If you have worked at the same place for the past two years, paid your rent and other bills on time and have an average credit rating, you can become a homeowner. Having a down payment equal to 10% of the sales price is just not necessary in every case.
The true, no money down mortgage that is currently available with great interest rates is the home loan program offered by the USDA (United States Department of Agriculture). The program is often referred to as the Rural Home Loan, but the name should not stop you from investigating this type of loan. Every state has areas that are eligible for this type of loan. In fact, most large cities have areas just beyond the city limits that are eligible for a USDA loan.
USDA will allow borrowers to receive a loan up to 100% of the appraised value of the property. It is also possible to have the sellers pay the closing costs from the proceeds of the loan.
The guidelines for an FHA loan state that buyers need to pay a minimum of 3.5% of the purchase price as a down payment. For a loan of $175,000 that would mean the buyer needs to pay $6,125. HOWEVER, the guidelines also state that part or all of that money can come from a relative in the form of a gift. Parents or grandparents who are hoping to help their relatives start a new life are often happy to help by supplying funds for a down payment.
Both of these loans approve borrowers who have less than perfect credit scores. Sometimes it is even possible to get an approval from FHA with a lower credit score if there are extenuating circumstances and the borrower can prove they have reestablished their credit and spending habits.