How to buying a house with no money down.
Today, I’m going to talk about one of the most asked about subjects I get in real estate or probably any agent gets for that matter, and that’sbuying a house with no money down.
So let’s talk a little bit about how to buying a house with no money down or very little down. So first, let me go over different loan programs to give you an idea of the options.
Now, keep in mind, different places in the country work a little different. So check out with your real estate agent or probably even better, your mortgage lender, what options are available. So let’s start off with the
buying a house with no money down
government loans. Everybody has heard of an FHA loan which is a department in HUD (Housing in Urban Development). FHA stands for Federal Housing Administration which they are ensuring the loan in case of default. The second one is VA. Now if you’ve been a veteran or have VA eligibility, you’ve been in the reserves, then you could get a VA loan.
So we’ll start off with FHA. It’s probably the most popular. FHA is a formula, but it’s about 3 1/2% down. That’s the down payment for FHA. And then you have the closing cost, and again, this could vary on a lot of different factors. One could be the state you are located in; some states have a little bit less closing costs, some states have a little bit more closing costs. It also depends on the loan amount as well, but let’s just say the closing costs are around 4%.
Now with FHA loan program, you could actually get into a buying a house with no money down for nothing because FHA will allow you to get the down payment and the closing cost as a gift from a relative.
So you could get both that or maybe you just want to get the down payment as a gift or one or both and you could get the closing costs, you could get the seller to pay the closing costs. So that’s an option. Now there is obviously more options your lender is going to go over with you, depending if you have 401K and IRA’s, different stuff like this.
So definitely get with the lender, talk to them about these.
The second one is VA. VA, probably hands-down for buying a house with no money down and even no closing costs. It’s certainly one of the better options out there. If you are a veteran or been in the reserves and you have the eligibility, because a VA actually has a no buying a house with no money down program. So there is no down payment and then you have your closing cost, but again, you could get that money from 401(k), you could get it from a gift from a relative, you could ask the seller to pay the closing cost for buying a house with no money down. So there’s a lot of different venues that you could go on that. Another one is, when most people talk Fannie Mae, you have Fannie Mae or Freddie Mac, but most lending institutions use a conventional loan and is generally just underwritten under Fannie Mae. So that’s what we’re going to talk about. Now Fannie Mae does have a 5% down and 3% down program in most cases. And you could get into this with your lender because it all depends on your particular case, but in most cases you don’t want to go with the 3% because it’s just going to be higher interest rate, much higher mortgage insurance premium etc. But they have a 5% and you could even get that money and the 3% for that matter, you could even get that money as a gift from a relative.
And then you have on the closing cost, again you could have the seller pay that. For example, in the Florida, we have something called – and they have it throughout the country, but it really depends where you are located, call the USDA. This is more for the rural areas, but it doesn’t necessarily mean you are really, really rural, very far away. We have it in some of our outlining cities and you could go to their website, type in address and it will tell you if you are eligible or not. So you could just type in USDA eligibility, read a little bit about that, but it’s 100% financing program and they have it throughout the country. It’s just do they have it where you are at is the question. So is 100% financing and then you could have the seller pay for your closing cost if you want. Now what I’m also doing is I’m going to be attaching a couple different links below the video and it’s going to take you to websites where you could get down payment assistance.
There’s literally hundreds and hundreds of down payment assistance programs or buying a house with no money down, probably thousands across the US and most people don’t know anything about them. And the problem is, a lot of people don’t even know where to start. And you have to be careful and you have to do a little bit of your own research because a lot of times, if you call the bank institution and they don’t work with the down payment assistance and you ask them about it, they are probably not going to say, “Oh it exists. You need to go to this back over here. They’re just going to say, “No we don’t have it.” And it’s the same thing with brokerages as well. Most brokerages do not work on the down payment assistance program, most of them are the bank institutions like Bank of America, Wells Fargo, Chase, Citi, Regents – different ones like that around the country. So definitely check it out. Now again, when you’re using a bank, my recommendation if you are using a bank, a big banking institution, always try to use a loan officer that’s local because it is the whole thing, out of sight, out of mind.
So use a loan officer who is local. And of course, always try to use a real estate agent that knows what they’re doing, make sure you interview your real estate agents. But that’s the basics on the different loan programs and how they work as an overview. Again, everybody’s situation is a little bit different, and you could see what works for you. You’ll enter your information in there, nothing personal. Nothing is going to spam you or do anything, it’s just some of these programs, they need to calculate how many people do you have in the household, what income do you make, because a lot of them are related to income. I mean if you’re making $180,000 a year, you’re hardly going to find a down payment assistance program. So it’s really going to depend on a bunch of different factors. So answer them. If you have any questions at all, reach out, leave a comment.
Keep reading: Real Estate Agent How to choose and what questions you need to ask.
I wish you the best of luck. Alright, have a great day and best of luck in your home buying process or buying a house with no money down.
