How can I purchase a 2nd home with the least amount of money down?

Question

I have $20K in equity in my first home and the second one will cost about $250K. My brother and his wife and my mother will live there and pay me rent. I want to put as little down as possible.

Answer 1

This is going to sound a bit cold, but your brother and his wife and your mother...where do they live now? Do they rent? Why do you feel the need to buy a home for them to live in and pay you rent when it appears you don't have a lot of cash available? And $20K in equity is not a lot these days, either!

You are putting yourself in a dangerous situation, financially speaking, if you will be relying on rent from family members to make the mortgage payments on that house. If something unexpected happens, like your brother losing his job (for instance) and the rent doesn't get paid, you've got not only money problems but family problems as well. Picture having to evict your Mother et al for non-payment of rent while trying to stave off foreclosure on not just one house, but both homes!

Instead of looking for low down payment options, if I were you, I'd re-think the whole idea and come up with a plan that's a bit less risky to you, both financially and family-wise.

I hope I'm way off base, and that you are in a better position than you've indicated.

Answer 2

You will need 100% financing no question, don’t bother trying to tap your last $20k in your home, not in this market. There are MANY brokers that can do 100% financing on second homes, even without income verification. I would look into someone that deals with a lender that can add you all onto the loan. Even with bad credit you can add several people to a loan and average their scores with some lenders. If your broker, wife, and mother have terrible credit, then it will be up to you. Do not fret though. I have lenders that do 100% financing on a 2nd home with only a 620 credit score.



Now in this market you should be easily able to buy a home well under market value and then you can have the seller pay all of your closing costs.



Do you show any money in “reserves” such as 401k, IRA, checking, savings… that always can help you get a better rate.


Check out more info at http://www.scottlushing.com/mort101/index.html

Answer 3

go to your local tax assors office and request a lot of foreclosed homes or homes in which back taxes haven't been paid you would be amazed at the homes you can get for cheap this way the best thing is you won't need a loan you will own the place just by paying back taxes. all you have to remember is you have to pay property taxes on it every year. which you would be able to do with the rent money you collect easily. Its worth a shot check it out!!! you may have to pay a small fee for the list but it is worth it, and make sure you drive to the location and check out the house before you pay the taxes. as with any home get an inspector to check all the crucial points so that you won't be unaware of major repairs that may need to be done

Answer 4

It all usually gets down to the type of credit you have. It would be alot easier for you to get a low morgage as well as little down if you have excelent credit. If not it may be harder. No one forces you to put alot down, if any, it all depends how big you are willing your monthly payment to be. Look around for good loans also.

Answer 5

depends on :

- how long you had your previous house and if you payed morgadge in time
- your credit score
- your earnings and job (how long you've been working for the company)
- money on the account(probably no less then 10k).

Answer 6

I found a good resource to answer this question http://the-real-estate-resource.blogspot.com/2006/12/financing-2nd-home-with-second-mortgage.html