Can you buy a house without a down payment?

Question

I've heard that you can- has anyone done this? Is there some kind of a catch to it?

Answer 1

Yes, it is called 100% financing. You have to qualify for this kind of loan with a good credit history and score.. Check the difference in interest rates as well as closing costs when choosing this kind of loan.
Like with any mortgage loan, there is always a catch somewhere, just which one can you live with in order to purchase a new home.

Jas

Answer 2

Yes it is possible to purchase a home with no money down. However you must qualify for 100% financing. There are many different types of loan programs out there especially for first time homebuyers. Some even do more than 100% financing (103%, 106%) so that you can finance in most of your closing costs as well. If you are military you can probably get a VA loan which is 100% but does have a funding fee (which can be financed).

As for the interest rates, they are not much higher than for 80% financing. It really depends on your credit score and other criteria that lenders use to determine your credit worthiness.

The best place to start is to contact a mortgage lender. Check with your bank first.

Answer 3

Yes you can definitley do this my husband and I just recentley did this, and it is not nearly as horrible as everyone has made it out to be. We had a problem of having poor credit from stupid mistakes we made when we were younger. We couldn't find any banks that would lend us the money without crazy interest, so we went to a mortgage broker, gave him our information and since he had access to almost 80 different lenders he found a lender that was willing to work with us with 100% financing. Our interest rate is a little higher, it's 8.1%, not nearly as high as people make it out to be. And since we are only on a 3 year term that will be enough time for us to build up an even better credit score and then switch to a bank that will take over our mortgage. It's not nearly as bad as people make it out to be, the only "catch" is that you have to pay mortgage insurance since you're not having a down payment, but after you have 20% of your mortgage paid you can get rid of it. Yes having no downpayment is a little more expensive in the long run, but it's not horrible and all the while of making on time payments on your mortgage your credit score is increasing as well as the equity in your home. So if you are really interested in a no down payment mortgage I would try going to a broker, they will be able to help you out no problem. Good luck with everything.

Answer 4

You can get a loan for 80%, and a second loan for the 20% - but the 20% loan will be at a higher rate - from my experience it was about 10% interest on the second loan. Lots of lenders may require you to have PMI insurance if you do not have a down payment, the second loan got us around that. Check into first time buyer programs and if there are any classes you can get to reduce the % rates and help with the down payment. My friend got lots of help with those options.

Answer 5

Most lenders would not accept less than 10% down payment. Even with down payments of 10-20% you will need to pay PMI (mortgage insurance). This is a private insurance policy that will pay the bank for the difference between the loan balance and the house's foreclosed value should you default

If you did find a lender that accepted no money down, I imagine they would charge you a very high rate of interest, and would have some other way to secure the debt. I would be wary of any company making promises like this.

It would be better to build up your credit, borrow or save the 20% down payment, and shop around for the best deal.

Answer 6

There are people making money telling you how to do just that. Think they are the ones getting mainly ahead.

Easiest is to go to a reputable lender and pre-qualify yourself. That will tell you how much you can actually qualify for / top price you can get a home loan on.
You then find a home within that range and make an offer wherein you get money back at closing to cover your closing costs = basically price presented at loan higher than actual selling agreement.
A good mortgage broker can help if you have credit issues. There are many programs available for first time buyers. Have to be very wary, know what you are signing for - that is the catch.

Answer 7

You can but your montly payment will be higher since you have put no money down. Over the length of the loan you will be charged more since you are financing the entire amount instead of part of the amount. And normally you have to have above average credit rating to even qualify for this.

But think......seems great to put nothing down and move right in. But now you have to pay more per month and more % per month......so did you really get a deal? No....you just gave more money to the bank cause you choose not to put anything down.

Same principal with credit cards. Wait a few weeks and save up the money and buy something or buy it now on a credit card but pay up to 20% interest or about 20 cents more per dollar spent.

This is how people get in trouble and behind......credit. The secret to getting ahead is doing the least amount of credit possible as that is money not given away. The more you can put down on a car, the more you can put down on a house, the more you pay with cash or debit card....the more money you will have in the long run.

Answer 8

A first time home buyer can get away with a smaller down-payment say 5-10% but you pay more in interest than if you can swing at leat 30%. Can't say I've ever heard of anyone doing it with no down-payment - you'd have to have a damn good credit rating and some serious collateral to pull that off.

Good luck.

Answer 9

Yes, you can.
I see nothing wrong with it.
It's how I got my home loan.
We have great credit and money in the bank. I just chose not to spend it on a down payment because my husband has a dangerous job and I'd rather keep it as a cushion right now. We also have money in a 401(k) and other places that we didn't want to touch for a down payment.
You don't have to take out a piggy-back loan (80/20) to get a 100% financed loan and you don't get interest rates as high as credit card rates. Our interest rate is a little higher until we've established 20% equity in our home, because until then, we pay PMI insurance. (Private Mortgage Insurance)
However, it made better sense for us and I feel like we came out ahead in a lot of ways.
Check out some books by Suze Orman. She speaks in everyday terms and breaks things down wonderfully.
Educate yourself to see what the best options are for you.
Best Wishes!

Answer 10

YES: You have to make sure the Appraisal value is 130% or more of the sale price. $100,000 appraisal value will permit a $70,000 nothing down mortgage.

You can borrow the down payment on a second position mortgage note. Many parents make loans this way so their children can start owning vs renting. Many communities help young people get started by this method. The owner of the property for sale may take the down payment portion in a second mortgage. You won't know until you ask.

E-mail me and I can give you options.