8 Ways to Buy Your Home with Little to 0% Down-Payment Using Bank Financing.
Here are 8 approaches that will LEGITIMATELY allow you to buy a home with little or no money. I want to emphasize that these approaches are 100% legal and operate by taking full advantage of the program guidelines. Some banks (usually the large ones like Wells Fargo, Bank of America, SunTrust) will all have their own additional requirements… but we have several lenders that specialize in purchase mortgages in SC that are here to help.
A word of caution… Do not commit bank fraud. If you get caught the ramifications are serious and could result in jail times and large fines. Let us put in you touch with a loan officer who will guide you into a home with 0% to little money down.
Lastly, if you are looking to buy a home with 0% to little money down… it is never too early to call to see what you have to do to make it happen. Also, this is just a guide and, as your Realtor, we must be aware that certain homes will be ineligible for financing under certain programs. If you think you can go out and find your dream home and then try to get the financing in place… the home will be under contract with someone else in today’s market. So call us at (843) 647-6222 … even if you are just starting the process.
1. VA (Veterans Administration). 0% Down-payment
a. You must be (or married / widowed) to a military / veteran
b. After $425,000, some down payment is required.
c. For primary residence only
d. The seller can pay all of your closing costs
e. Credit score as low as 580 with some lenders… call and as
2. “VA LIKE” -- 0% Down-payment
a. A relative must have be serving/served in the military (daughter, spouse, grandparents, siblings, children, grandchildren)
b. Offered by Navy Federal & USAA
c. Can do up to $1,000,000 0% downpayme nt with high credit score
d. For primary residence only
e. The seller can pay all of your closing costs
f. Credit score as low as 620 for most programs
3. USDA – Yes… the people who inspect milk! – 0% Down-payment
a. You have to be in an eligible area with lower population density. Check geographic availability here: http://tinyurl.com/k8xdacg
b. The seller can pay all of your closing costs
c. There are income limitations – Hi income earners not eligible
d. Credit score as low as 580 with some lenders… call and ask
4. 0% Down State & City Programs.
a. Some properties (usually in lower income areas) allow for 0% down-payment programs.
b. These are very limited… and the programs often run out of money.
c. Usually you will need a 620 Credit score for these programs
5. Fannie Mae – 3% Down-payment
a. Must be primary residence
b. Down-payment can be gifted… call for details
c. The seller can pay all of your closing costs
d. Several programs allow for a co-signor who will not live in the home
e. Credit score as low as 200 with some lenders… call and ask
6. FHA – 3.5% Down-payment
a. Anyone is eligible… not just for 1st time homebuyers
b. Down-payment can be gifted… call for details
c. The seller can pay all of your closing costs
d. For primary residence only
e. Credit score as low as 580 with some lenders… call and ask
7. Fannie Mae – 5%
a. For primary residence only
b. 680 or higher credit score
c. If you put 20% down-payment… It can all be gifted
d. The seller can pay all of your closing costs
e. Up to $448,000 purchase price… then more down-payment required
Gifted Funds:
A much overlooked approach is to have eligible people (family member, EMPLOYER, someone who can demonstrate a close relationship) provide gift funds for the down-payment. The definition of a gift is money provided to you that does not have to be paid back. The gifting party will sign a gift letter stating this… so it does not become a debt. NOW… you can still pay it back… you are just not obligated to do so.
What about programs that do not allow for gifts?
Some programs do not allow for gifts. That being said, if you receive a gift of funds and hold them in your bank account for 3 months… the lender will legitimately consider these your funds… this is 100% legal. NOW… this must be a legitimate gift which you must not be obligated to repay or else this is considered undisclosed debt which is fraud. You can now use these funds as the down-payment as the lender considers this “seasoned”, meaning that the funds belong to you.
Rent with an option to buy / lease purchase…
You can do this… but in today’s super competitive market, most sellers want you to pay all at once UNLESS… there is something wrong with the house… or they are charging you a very high rent or price on the home. These are more common in times where financing is hard to get… which IS NOT the case today as many programs have opened back up since the recession.
What if you can not document all your income?
There are lenders that will do more informal documentation of income (bank statements, etc.). Usually you must be legitimately self-employed. These ARE NOT the fly by night loans that were available on the early 2000’s that helped lead to the financial crisis. This is a good alternative for less than perfect credit business owners ramping up a business.
Down-payment assistance programs. There are a few down-payment assistance programs available that will “gift” you the money. There has been a large crackdown on many of these programs as they were illegally getting the down-payment from the Seller… which is fraud. Call for details as they all vary in how they work.
About the Author
I started my real estate career in 1993 as a loan officer for a national lender. That led me to found a mortgage company in 1999 lending in 7 states across the country. More recently, I have been fortunate to work with buyers and sellers as their Realtor and the Team Leader of The Coast at AgentOwned Realty. I’ve been a party to over 1500 real estate transactions and I hope this free guide will help you in your upcoming home purchase.
The Coast’s mission is to provide our clients an “Outrageously Superior” experience when buying and selling a home. This entails using technology, excellent customer service, and most importantly… access to years of knowledge and experience that are an invaluable resource to our clients. Our agents cover the entire Charleston area… each with their own geographic area of expertise. Call me at (843) 647-6222 with any questions you may have.
Sincerely,
Oliver Caminos
(843) 647-6222