How to Buy a Home with $0 Down

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Jorge Chiriboga

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If you are unsure about whether or not you can buy a home, please read below about the different ways to buy a home.

You, like many people never buy the home of their dreams simply because they don't think they have enough money for the down payment and closing costs. They've been told that they need to have some money saved for closing costs  and the mandatory downpayment (3.5%, 5%, 10%, 20%, etc). Well, this simply isn't true completely.

So why have so many people told them this?

Quite honestly, it's because selling homes to people with 3.5%, 5%, 10% or 20% down is easier than selling homes to people who have little or no money for a down payment. Most agents would rather go after the "easy sale" than try to help people who have special needs.

This report is specially designed for people with good or decent credit and sufficient stable income, but who just don't have much money for a down payment.

Option 1: First Time Home Buyer Programs
Some Housing Development Authorities from the state, county or city levels have first-time homebuyers' programs that offer below-market, fixed-rate, 15- or 30-year loans. There are restrictions as to maximum household income, as well as the price of the home you are buying, the age of the home, and only certain areas qualify.

The main condition with these Down Payment Assistance (DPA) loans is that if you sell the house before the end of the loan term, you may have to "pay back" a portion of the subsidy used to get the lower interest rate (if you make a profit when you sell it). However, if you're a first-time homebuyer, this may be an option to consider. Also, the money is available in a first come first served basis, as money is allocated in a limited amount yearly. These funds go away quickly.

Let me just highlight just a few of the DAP choices you have right now:

Most of these programs require a minimum of 640 FICO score.

Option 2: Special Loan Programs
Special loan programs come and go quickly.

The first special loan for Teachers, Firefighters, Paramedics and State's Employees.
The second special loan up to $1,000,000 is geared towards the medical community: medical doctors, dentists and veterinarians.

Option 3: VA Loans
The VA loan program for owner-occupied housing is one of the best loan programs. It is possible to obtain 100% financing with absolutely Zero downpayment and the seller or builder is allowed to pay all of the veteran's closing costs and pre-paids -with no mortgage insurance- making the total cash required to purchase in some instances zero. The maximum loan amount is $417,000.

You may be eligible for this loan if you are a reservist or guardsmen and you meet ANY of the following 5 conditions.

  • You have completed six years in any U.S. reserve component, since 1944
  • You have served 90 days in a "War Zone", such as Somalia, Haiti, Grenada, Persian Gulf, Bosnia, Agfhanistan, Iraq, etc.
  • You have served 181 days of continuous active duty.
  • If you were disabled before completing your six year obligation.

You were discharged at the convenience of the U.S. government, such as in a reduction in force, before completing your six year obligation.

Veteran widows can also apply if they have not re-married.
 

Option 4: FHA Loans
Although this isn't a "No Money Down" option, the FHA loan is by far one of the best alternatives for people who want to buy a home and don't have much money to put down. With an FHA loan, you could put down as little as 3.5% of the purchase price. Plus, FHA loans are easier to qualify for. Technically, an FHA loan is not FICO score driven but most of the lenders will require a 620 FICO score. However, there are a few lenders that can work with you if your score is less than the minimum score.

While you can't "borrow" the 3.5%, you can get a "gift" from a family member or borrow from your 401k, for example, and get the loan with no downpayment out of your pocket.

FHA loans do have requirements and restrictions. Not all townhomes and condos qualify, and the maximum loan amount you can get for a single family home is $295,550. But if you've been dreaming of a new home and think you might be able to "scrounge up" 3.5%, this is a great way to go.

Where To Begin
Now that you have four good options for buying a home for little or no money down, where is the best place to begin?

The first step is to contact us so we can evaluate your situation and advise the best program and LENDER for you. We would like to invest 20 minutes of our time in our office or over the phone with you to better understand your needs.

And we'll do more than help you get financed! Financing is only the first step in the home buying process. We are dedicated to helping you through the entire process, delivering world-class service all along the way.

We can help you find the right home, negotiate the right terms, and then make sure that you actually get to the closing table. It's all part of our Preferred Buyers Program, which you can enjoy for FREE! That's right, it won't cost you a dime!

If you have more questions, please do not hesitate to Email me or contact me at 713-589-3234 for more information.

As a By Referral Only®, and Certified Negotiator Expert (C.N.E.), Certified Distressed Property Expert (C.D.P.E), REALTOR® , I am committed to providing such extraordinary service and expertise that you will gladly refer your friends, family and acquaintances. With your help I am able to build strong business relationships one person at a time.


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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
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