How To Buy A Home With No Money Down?

November 1, 2022

Are you considering buying a home but worried about the down payment? Don’t worry – you can buy a home with no money down. There are several ways to do this, each with advantages and disadvantages. Here’s a look at your options.

1. Homebuyer Down Payment Assistance

Like most people, the biggest obstacle to buying a home is coming up with a down payment. But programs available can help with the down payment and even cover closing costs.

One such program is the homebuyer down payment assistance program from the Department of Housing and Urban Development (HUD). This program provides up to $10,000 in down payment assistance for qualified homebuyers.

Down payment assistance (DPA): Also called a “silent second,” DPA bridge loans cover a down payment on a new home loan. The assistance comes from a second mortgage with its interest rate and monthly payment. However, this second mortgage must not be repaid until you sell or refinance your home.

2. USDA Loans With No Money Down

The U.S. Department of Agriculture (USDA) offers a loan program for buyers in rural areas. The USDA Rural Development Loan is a zero-down mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA Rural Development Guaranteed Housing Loan Program, created by the U.S. Department of Agriculture.

USDA loans are available to homebuyers with a minimum credit score of 580. If you have a credit score of 720 or higher, you may be eligible for a streamlined version of the loan, which requires no down payment.

To qualify for a USDA loan, your household income must be less than 115% of the median income for the area where you intend to purchase a home.

3. V.A. Home Loans With No Down Payment

The VA loan is a government-backed program available to veterans, active military members, and reservists. This program provides 100% financing on homes with no down payment required. Additionally, there is no minimum credit score requirement for this loan. However, you will need to pay a funding fee of 2.15% of the home’s purchase price. This fee can be rolled into your loan amount.

4. Conventional Loan 97 for First-Time Home Buyers

A Conventional 97 loan is a mortgage available to first-time home buyers. This program provides financing for up to 97% of the home’s purchase price with no down payment required. There is also no minimum credit score required for this loan. However, you will need to pay private mortgage insurance (PMI) if your down payment is less than 20%.

5. HomeReady Mortgage  

The HomeReady mortgage is a conventional loan designed for low- and moderate-income borrowers. It offers many of the same benefits as a traditional conforming loan but with a few key differences. The most notable difference is that it allows borrowers to use income from non-borrowing household members to qualify for the loan.

The HomeReady mortgage is a fixed-rate loan of 30, 20, 15, or 10 years. You can choose whichever term best suits your needs and budget. The minimum down payment for a HomeReady mortgage is just 3%, much lower than the 5% or higher down payments typically required for conventional loans.

• How Can I Get Money For A Downpayment? 

1. Look for Down Payment Assistance Programs: Several government and non-profit programs offer down payment assistance for first-time homebuyers. These programs can provide you with the funds you need for a down payment and help with closing costs and other fees associated with buying a home.

2. Tap Into Benefits for First-Time Buyers: If you’re a first-time homebuyer, you may be eligible for certain benefits and programs to help you with your down payment. For example, the Department of Housing and Urban Development offers a First-Time Home Buyers Incentive program, which provides up to $10,000 as a down payment.

3. Supplement Your Income With a Part-Time Job: If you’re struggling to find the funds for a down payment, consider taking on a part-time job. This extra income can help you reach your savings goals faster.

4. Sell Some of Your Belongings: If you have items of value that you no longer need or use, consider selling them to raise funds for your down payment. This could include things like jewelry, electronics, or even a car.

5. Downsize Your Lifestyle: If you’re serious about buying a home, you may need to sacrifice your lifestyle. For example, you may need to downsize your living situation or eliminate certain luxuries. This will free up more money for your down payment.

6. Get a Gift from Family or Friends: If you have family or friends willing to help you financially, you may get a gift that can be used for your down payment. Be sure to get the gift in writing and have a lawyer review the agreement to ensure it is legally binding.

7. Find a Lender That Offers No Money Down Loans: A few lenders offer loans with no money down. These can be tricky to find and may come with some strict requirements, so be sure to do your research before you commit to anything.

Conclusion

Buying a home with no money can be a great way to enter the housing market if you have the financial means. There are several programs and benefits available to first-time homebuyers that can help you with your down payment, and a few lenders offer loans with no money down. Do your research before you commit to anything, and remember that buying a home is a big financial decision.