To millions of people all over our country, the American dream of home ownership seems more like a pipe dream.
Even if we’ve worked our way up the ladder and done all of the right things, the fact is buying a home takes a lot of money upfront. Wait…doesn’t it?
Sure, that’s what we all hear – you need at least a 10 percent down payment or the banks won’t even talk to you. But what if that wasn’t the whole story? What if you could do it with far less or even none of your own money.
Can it be true? Can you really buy a home without a down payment?
The unconventional conventional mortgage:
It wasn’t that long ago – in fact, right before the housing bubble burst – that zero down loans were a common offering by many lenders.
But times have changed. Now the banks are required to thoroughly verify the ability of a homebuyer to afford a mortgage, and part of that process usually requires a down payment.
However, some banks are willing to get a little creative, provided you meet certain requirements.
If you have excellent credit and can prove you have the ability to pay, some lenders will actually let you take out two mortgages, one for the initial down payment of 10 to 20 percent and a conventional loan for the remaining amount.
There’s a catch, though. Usually the first mortgage loan that covers your down payment will come with a much higher interest rate.
This will likely result in you paying thousands of dollars more than you otherwise would have over the life of the loan.
“A little creativity and some
research should help you.”
There are other ways you can buy a home without a down payment.
Some government programs like the VA loan program offer loans to veterans and qualified former members of the military that require no down payment. Not only that, but the fees are usually incorporated into the loan so there is very little out-of-pocket cost.
Other government programs offer zero down loans for buying a home in certain underserved or high-risk areas.
These can be certain rural communities or urban areas with higher crime rates and are aimed at trying to bring more money to the area. Loans for these types of properties can be low interest as well as zero down.
There are other ways of buying a home without a down payment, including a one-time gift for the down payment that is tax free. If you have a wealthy family member or benefactor that can afford to help you out, all the better.
In any case, the fact remains there are ways you can buy a home without a down payment. A little creativity and some research should help you to discover a way that works for your situation. Good luck!
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