How can you buy a home with no down payment?

Question

We want to buy a home but have no down payment. What to do?

Answer 1

If you are a veteran, try to qualify for a VA loan.

There are a number of options for people in your position, but be very careful! There are programs available where you get an 80% first mortgage and a 20% second mortgage. Usually, the second mortgages are adjustable rate loans or lines of credit and the monthly payments can change at any time.

Before you start house-hunting, go to your bank or a reputable mortgage banker, have your credit report run and see how much home you can afford to buy. Just because you may qualify for a $250K loan, don't get one if you can't support the monthly payment. Get the loan based upon what you can afford to pay each month, including expenses and current debt.

You may get lucky and find a Seller who is willing to carry a portion of the sales price, but don't count on it. I know it's very tempting to try and buy a home without any money down but think long an hard about it. How secure is your job? If one of you got laid off, could you still afford to make the payments? Do you currently save on a regular basis? Can your parents lend you the down payment and secure it in the form of a second mortgage on your house? It's not impossible to get a home without a downpayment, but sometimes the loans available are given to those who can least afford the terms.

Consider the risks involved and your work and financial situation. See if you can save at least three to five percent and consider getting and FHA loan. Also see if your city, county or state has a first-time homebuyers program where you can get downpayment assistance. Good luck!

Answer 2

There are a lot of great comments already, but the easy way is to do two things:
1) Find a Realtor you like/ trust/ comes highly recommended by Friends and meet with them. Explain the situation. In most markets, buying a home with 100% financing is not difficult.

2) Meet with a lender. Either at a bank, or a mortgage Broker and get pre-approved. If you do not know of one, ask your Realtor/friends/family, etc.
The lender should be able to review your application and credit and explain what programs are available to you - there are literally dozens out there and they all have various qualifying criteria and benefits and drawbacks.

In the past year, more than half of the buyers I helped bought there houses with 100% financing and seller paid closing costs. Some programs require the buyer to have at least $500 or so in the transaction.

At the very least, you will probably need $500-$1000 for earnest money, but often can get that back at closing - ask the local Realtor as every market is different.

Answer 3

With poor credit, you will not be able to qualify for a 3% - 5% down payment loan. In fact, you would be lucky to qualify for a loan that required as little as 20% down, plus you would have to show that you have a substantial amount of cash on hand (like $5 - $10,000). And, you would get a pretty high interest rate. Not only that, when you buy a foreclosure, the seller (the bank) does not have to disclose any problems with the property, even if they know that the place is about to fall down, the plumbing and electrical are shot, and the roof leaks. Those issue then become your problem and you pay to have them fixed. And, banks do not agree to fix problems that an inspection may find or give you a break on the price because of it. The price is what it is. That's why foreclosures are so cheap to begin with.

Answer 4

if you are in a housing market that is stalled (say the Northeast) and prices are tanking, you might be making a good move, going with 100%financing if you qualify. I worry about people who buy high with no money down, and then when they want to move on, they have very little equity. But depending on where you live you might be making a good move. Also consider this: some people have used those phoney baloney checks to make a "deposit" you know the ones that come in credit card solicitations, and carry a 0% interest rate, then the seller has a deposit to keep if you don't go forward, and you write you offer contingent on the seller crediting you back your deposit amount at closing-see what happens. In a slow market, they might bite!!

Answer 5

It is all credit driven. If you have a 580 mid score you will qualify for 100% financing. However, there are several new programs- My Community Mortgage and CHAMPs programs that will allow 100% financing for lower scores if your overall profile is strong enough. Keep in mind that you will still have closing costs as well as 1 years worth of insurance premium necessary to close a loan that cannot be included in the loan amount.
You might consider going to your County to see what type of down payment assistance programs you will qualify for. There is one called the SHIP program that will give you as much as $15,000 to use for down payment and closing costs.
Try the link I added for down payment programs.

Answer 6

If you qualify for 100% financing, you can do it. The trick is, however, to find a seller that is willing to go into contract without a deposit. If you go into contract and break it by not going through with buying the house, the seller can keep the deposit, but if you haven't put anything in, the seller doesn't get anything.

Generally, sellers will want at least 5% as a deposit. When we purchased our house, we were lucky and were able to find a seller (builder) that accepted only $500 as the deposit. We had provided the seller with the letter from the lender that we were pre-approved for 100% financing and how much we were pre-approved for was higher than what the selling price of the house was.

Answer 7

Go into a reputable real estate broker, they will be able to tell if you are qualified for no down financing. The US Farm Home Administration used to do it, but you will have to buy the home in a "rural" area, which might mean a commute to and from work.

Answer 8

Make sure you have great credit. Now you want 2 loans, the first with an LTV of 80 so no insurance, then a piggyback HELOC to cover the remaining 20. Need help 516 535 5800 ext 239. Mortgage Consultant.

Answer 9

Get with an experienced Loan Officer. Have your 3 credit scores pulled and take a complete application. From there you can determine with him/her what you qualify for.