CAN PEOPLE STILL BUY A HOME WITH NO MONEY DOWN?

The home buying process is a challenging and overwhelming journey that requires a lot of planning ahead to help streamline all the steps to buying a house. Saving money for a Downpayment can be challenging on an average salary, given all the expenses of modern-day life.

Fortunately, there are many alternatives to a conventional mortgage that allow you to invest in your dream house with no money down. If you’re aiming to become a homeowner, you are already familiar with the challenge of saving up funds for your down payment. However, there are several government-funded loan programs that allow buyers to invest in a home with no money down.

These programs are designed for home buyers facing financial challenges, but as with everything in life, they come with strings attached. There are multiple programs designed to assist medical practitioners, army veterans, serving army officials, public school teachers and other public servants as well.

Every now and then there is a program that will help a homebuyer buy a home with very little down…but there is always going to have to be some investment of a buyer’s money when buying a home. There are many programs that will allow as little as 5% down. Some banks may offer promotional grant programs for people meeting certain criteria (first time home buyer, income, etc.) and in those cases there may be some funds available to help buyers buy. Searching with various lenders is the way to find these programs which pop up from time to time.

Putting No Money Down

Industry insiders and experts strongly advise to ease out the home buying process by saving up to cover at least 20% of your down payment. In the long run, this will aid you reduce your monthly mortgage insurance costs. However, if you are unable to save up that kind of money, don’t think that you cannot buy a house with no money down.

Statistics reveal that majority of the modern-day homebuyers place an average of 8.8% of their down payment when buying a house. You can avail one of the may US government-backed home loan programs that aid home buyers engulfed financial challenges. These loans come with agreeable terms, such as lower interest rates and longer lifespans. However, they have a tough eligibility criteria and you will have to maintain a good credit score to be eligible.

There are many programs that assist home buyers with poor credit scores, or covering their closing costs. However, even with these loans, the home buying process entails several expenses, including monthly payments, insurance, property taxes, closing costs, maintenance and upkeep, and more. In this article, we will take a look at some ways homebuyers can invest in a house with no money down.

Alternatives to Down Payments

Potential homebuyers with zero down payment have nothing to worry about as long as they are focused on research, and maintaining a stellar credit score. It is important to keep your financials in order because every now and then, there is a striking program that aids homebuyers in the home buying process.

However, it is important to note that no program offers to take care of the entire home buying cost. Buyers will be required to make some kind of investment when buying a home. There are multiple programs and loans that allow as little as 5% down payment. Many banks and financial lenders provide promotional grant programs for individuals who are eligible for the criteria.

For instance, the first-time home buyer program, income-based programs and others. Even rent to buy properties and rent to own programs are an affordable way of attaining home ownerships without the overwhelming financial baggage. It is important to search for the ideal program by sitting down with various lenders and contacting your state or county authorities to check the programs that they have to assist first-time home buyers.

FHA Loans

The Federal Housing Administration (FHA) loan assist buyers who can make as less as 3.5% of the down payment. However, this loan requires a credit score of at least 580 or more, and the debt-to-income ratio must be below 43%. Home buyers who have a credit score of less than 580 will be required to make a down payment of at least 10% of the total cost.

It is important to note that FHA loans usually come with higher interest rates as compared to the conventional mortgage plans. They do not account for closing costs and other expenses entailed in a home buying process. Moreover, the exact FHA loan amount depends on the location and area of your chosen home.

USDA Loan

The US Department of Agriculture loan aids people buy homes in rural areas with no money down. This eases out the home buying process with its Single Family Housing Guaranteed Loan Program, which is designed for low-moderate income households. The income requirements and eligibility criteria tends to vary from one state to another.

The USDA loan program is considered one of the simplest steps to buying a house without a down payment. It applies to rural areas and includes many suburban areas. The USDA website can guide you on whether your chosen location falls within its map. It doesn’t come with a strict qualification criteria, however, the no money down affordability comes with an upfront funding fee, which amounts to 1% of the total loan payment.