You can buy a house no money down several different ways
People all across North America have learned how to buy a house no money down and you can too. There are several ways this can happen. Here’s my top picks:
Buy right from the owner. When you do this, you and the owner can negotiate now much the monthly payments will be, who handles the taxes and how much insurance you should have. The down payment is part of the negotiation process too.
Why would an owner do this? Some property owners are willing to work with people who have less-than-perfect credit. Sometimes the owner is trying to help someone get into a house. The property owner is also expecting to make a profit. He can make more money by selling it direct and financing the purchase than he can by selling it and getting a lump sum payment.
Buying this way, you can get a direct mortgage where all your payment goes toward interest and the principal, or you can get a lease to own. In this case, you and the house owner decide how much of the payment goes toward interest and principal, and how much is rent.
One of the best things about this is when you keep your payments up, you can apply for a conventional mortgage. Your equity in the house serves as your down payment for a regular loan. Sometimes the owner wants you to wait a few years before applying for a commercial mortgage. Sometimes you can do it after making a year’s worth of payments.
The federal government offers two programs to buy a house no money down. Both have qualifiers, but if you meet those requirements, you’re in.
Dan Green at The Mortgage Reports says, “If you’ve never heard of the USDA loan program, you’re not alone. It’s a niche product serving a fraction of the U.S. housing market, and most banks don’t offer them. However, eligible suburban and rural home buyers can use it for 100%, no-money down mortgage financing.”
One of the missions of the USDA is to help improve rural areas of the United States. The definition of rural varies by area, so before you say you don’t qualify, contact the nearest USDA office to find out if there are rural areas where you want to live.
The drawback is the USDA loans require an upfront payment of mortgage insurance. This is less than a typical down payment for a mortgage.
The VA offers loans to honorably discharged veterans and spouses of veterans in many cases. Trusted Choice explains who is eligible and says, “VA loans provide mortgages with competitive interest rates and offer qualifying applicants the opportunity to purchase a home with no money down and no need to purchase mortgage insurance.”
In this case, buy a house no money down means no money down at all. A report at Bankrate says 91 percent of VA home loans are made with no money down. If you are in the military or served, this is the best program out there.
Every state in the US has some sort of program for low income residents to buy a home without needed a down payment. These programs give a home buyer money for the down payment. When the house is bought, that money converts to a forgivable loan. Contact your state’s community development agency. It’s named different things in different states. Mortgage companies are familiar with these programs.
It works like this:
You apply to the program. The program determines how much money you can borrow. You get down payment money based on the size of mortgage you can afford. If you buy a home for less than the maximum amount, your down payment help will typically be reduced. Here’s the Texas program, for example.
If you qualify for this program, getting a conventional mortgage should not be a problem. Try to get pre-qualified anyway because this helps when negotiating with a seller. Banks and mortgage companies treat the down payment help you get from the state program as if it’s your money. There’s no questions about how long you had the money or where it came from.
Go shopping for a house. Find one you like. Make an offer.
If the offer is accepted, buy the house. The down payment is delivered to the bank and then paid out to the homeowner. For each year you live in the house, part of that loan is forgiven. Usually after five years, the whole down payment is forgiven. You don’t have to repay any of the state money.
To buy a house no money down under these programs, you do have to meet income limits. However, these limits vary by community. What is low income in one place may not be in another. The only way to find out is to ask.
ONE MORE OPTION
If you can’t figure any other way to buy a house no money down, there’s one more way that does require a down payment, but not right out of your pocket. Borrow it from someone else. Sometimes you can get family or friends to front you the money. If you do this, get it in writing so there’s no question later on about who has to repay what and when. You might also be able to borrow money by using something you own as collateral.
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