Buying a home for the first time can be scary. Even more so if you have not started saving money to help with a down payment. After all, everyone knows that just like a car and for every other big purchase, you have to put a down payment on the item especially to get the loan.
However, recently as times advance and the wealth limits are changing, more people are realizing that you don’t need a down payment to get a loan. There are many ways you can get a loan and buy a home without a down payment! And here are 5 ways to do so!
Apply for a Zero-Down loan from the VA
The VA or Veterans Affairs offers a loan that is a no down payment mortgage that is available to all members of the service, regardless of Active, Retired, Veteran, or even their spouses. These kinds of loans aren’t just backed by normal banks like common mortgages but are backed by the U.S. Department for veterans.
This means they will have lower rates, easier requirements, don’t demand a high credit score for the best rate and have different guidelines. Qualifications are pretty straightforward:
- Military Service, Active and Retired, or Reserves for six Years
- Honorably Discharged
- Spouse of Member who was willed in Active Duty
And there are many key benefits for you such as
- Doesn’t Require the best Credit Score
- No Down Payment Required
- Below Market Mortgage Rates
- Derogatory Credit marks won’t Disqualify you immediately
- Doesn’t require mortgage insurance
- Has No Loan maximum
Look to See if Home Buyers Assistance can Help You
Buying a home for the first time can be scary and confusing, but luckily there is Homebuyer’s Assistance, and these people can assist you when you’re not sure what to do or what the next step is.
They offer both local and national assistance and are willing to help you get home and walk you through the steps. They may offer you ways to get better loans, loans themselves, or even tell you which areas will be available to get more help than others. Most offer non-profit help, meaning their whole goal is to assist you.
Don’t Forget about the USDA loans
The USDA is the United States Department of Agriculture and is often seen giving loans for more rural locations through their “Rural Housing Loan” Program, but gives 100% down payment free mortgages.
Just because their statement and loan say, “Rural Housing” doesn’t mean that is the only place they seek to help you achieve housing. This loan can also be used in suburban areas, neighborhoods, and anywhere that isn’t a downtown location to help low-to-moderate income class people achieve housing.
The Downside is that the USDA does enforce income limits, which means that if your income is more than the medium of the area, they will not grant you a loan for that area. But they do offer a way to check this on their website giving you a better idea of where you can get a loan for.
See if Friends or Family are Willing to Gift You a Down Payment
While it may not be that practical because your friends and family most likely have their things going on, and are most likely not “Rich” in the aspect of wanting to give money away, you could always ask someone for help when you are low on cash.
There is a common saying, “Closed mouths don’t get fed” which means that if you don’t say anything, no one will be able to know what you need. So if you aren’t telling anyone you need help with a down payment, no one will assist you.
The benefit if your family or friends help you is that you won’t have a set date to pay back this down payment, you can do it at your leisure, or you will just owe them a favor for when it comes back to you in the end. This helps if you’re in a tight spot where you’re not sure if you’ll be able to save enough money to buy a home that you need right now, but know you’ll be able to pay off a loan.
Have the Seller or Lender Pay the Closing Costs
This is a tricky tip that depends on what area you are trying to purchase a house in. There are different kinds of markets for homes, usually two which are known as Buyer’s Market and a Seller’s Market. While there might not be too many real differences between them, there is a major one and that drives the ability to use this leverage.
In a seller’s market, houses are getting sold fast and the seller can raise or lower the prices as they deem because everyone will be bidding on a house more and more to purchase it faster. This is when the seller dominates the market, and they make the rules on what goes and what doesn’t. In this market, you would not be able to ask a seller to pay the closing costs when they can easily find a different buyer.
BUT, in a buyer’s market, the buyer dominates the market. This means that more homes are being sold with not enough buyers, this is where you as a buyer would have more control over what you wish to have happened and how you’d go about purchasing your home. In this kind of market, it is possible to have the seller pay the closing costs so they can still make money off the sell, and get you a house while being relinquished of the home they wish to sell.
Getting a Home doesn’t Require a Mass amount of Savings
The common misconception is that a home buyer is required to put down 20% to purchase that new plot. While long ago down payments may have been the thing required to do, now it is less so. There are many programs and assistance to help you get home without ever needing a down payment.
Before you purchase a home and save up all that cash, look into these different programs to see if any can assist you. If you are part of a veteran family or were in the military, check the VA, see if home buyer’s assistance can help, or even check USDA loans to see if any apply to you. If all else fails, you could ask for help or see how the market you are in allows you to play the buying game.