Many people may ask how much they need to save in order to have enough money to pay the down payment when buying a new home. However, it is possible to purchase a new home without any down payment. This article will cover four ways in which you can buy a house without money.
How to Buy a House When You Have No Money
Before we can go through how you can buy a house with no money down, the most vital thing is to ensure that you hire a good lender. A lender, in this case, is the loan officer. Always remember that a loan officer can make or break the whole process of buying a home. Also, remember that the lender and real estate agent work hand-in-hand, and you must hire a real estate agent who understands everything about home buying.
The four ways to buy a house with no downpayment include:
The Federal Housing Administration (FHA) Loan is a government loan program insured by the Housing and Urban Development (HUD). It is among the most popular loan programs that first-time homebuyers can use to buy a home with no downpayment.
The good thing about the FHA Loan program is that it allows people with a low credit score to buy a home. Someone with a 580 credit score can buy a home! It allows for a 3.5% downpayment which you can get as a gift from a relative. Once you have the downpayment, you can get the seller tp pay for all the closing costs up to 6% of the purchase price.
A VA Loan is a mortgage option provided by private lenders and is partially backed by the Department of Veterans Affairs. It requires a $0 downpayment. Ideally, anyone who has been in the military is eligible for a VA Loan.
Unlike VHA Loans, a VA Loan does not have mortgage insurance. The Veterans Administration covers the loan in case of default and allows the seller to pay closing costs up to 4% of the sales price.
You might have heard of Freddie Mac or Fannie Mae loans. They are conventional loans and typically have a down payment of 3% or 5%, but like the other loan programs, someone can pay that for you as a gift.
Conventional loans allow the seller to pay closing costs up to 3% if you pay up to 5% downpayment, but up to 6% of closing costs if you pay more than 5% of downpayment. You can also request the lender to increase the interest rates slightly, then pay the closing costs.
USDA Loans are typically meant for rural areas but are not limited to rural areas. They do not require a down payment and allow up to 6% seller concession – that is, the seller can pay for up to 6% closing costs.
All the loan programs are fantastic. You need to get a good lender who will identify the best loan program for you.
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- What Is Mortgage Insurance and How Does It Work?
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- Do I Have to Use the Builder's Mortgage Company?
- FHA Loans – The Pros and Cons of Getting an FHA Loan
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