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Updated by Tammy Emineth on Feb 13, 2020
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Home Buyers

In today's age it's almost impossible to save up $20,000 or more to buy a house, so how do people do it? Here are some secrets to buying a house even if you have no money.


USDA Home Loan

USDA Home Loan

A USDA home loan is probably the most common way to buy a house without a down payment. This is possible through the US Department of Agricultural mortgage program and is a zero down payment mortgage for eligible rural and suburban homebuyers. It's designed to help improve the quality and economy in outlying areas so you can't buy a house in the middle of the big city. However, many of the areas eligible are within 5 to 10 minutes from your neighborhood coffee shop or market, so it's not like you're out in the boonies. Other eligibility requirements include low and very low-income borrowers but the income thresholds vary by region, so it's definitely worth it to check out if you're eligible. All you pay for is a home inspection and earnest money deposit, which can run you less than $1000.

Find out more about the USDA Home loan




You never know unless you ask. You can literally get a down payment from friends, family, or other investors as long as you don't have to pay it back. This is called gift funds, and you can usually take up to $10,000 without having to pay taxes on it and lenders want to make sure that you don't have to pay it back so that it doesn't skew your debt to income ratio. If you take it out as a loan, then that will increase the amount of debt you have, which could increase your interest rates or even make it impossible to get the loan in the first place. But, simply asking for a gift for a down payment, even in exchange for other things such as babysitting, certain goods or services, and other tangible items that are not necessarily paid back in the form of money, are usually acceptable as a down payment.

Read More: The 20% Down Payment Myth


Down Payment Assistance

Down Payment Assistance

Many cities, states, and even counties have their own down payment assistance programs. If you qualify, they will actually create a second mortgage or loan that is the down payment. Many times they will come up with a 97% conventional loan and then a 3% additional loan to cover the down payment. This does come with higher interest rates and it can be refinanced in the future, but it definitely takes a big chunk off of your initial homebuying costs. It's important to talk to a lender in your city or county for the current down payment assistance programs available. There are also grants that don't have to be paid back and can be used if your income eligibility meet certain requirements and if it is your first home. However, there are some stipulations with that even. So it definitely pays to contact a lender in your city to find out what's available to you.


Use Other People's Money

Use Other People's Money

Face it, somebody's going to have to pay for the down payment, whether it's the state or county, the bank, or underwriters, but and this work specifically well with investment properties, you can use someone else's money to buy the home. If you're planning on investing in a rental home or cash flow property, consider getting other people to make the down payment for you. Look for investors in your local area or even a real estate investment club. Often times these people want to invest but they just don't have the time or resources. Instead of putting money into mutual funds and 401(k)s, convince these people to go with you. In turn, you might be able to gain enough on the rental property or even flipping and selling the property to not only pay your investor back but have enough down payment for your next home or investment.

Read more: How owning someone else's home can make you rich


Ask the Seller to Finance

Ask the Seller to Finance

Seller financing is not as big of deal as it was in the 1980s but it's not completely dead. However, it is a lot of work and you'll have to find motivated sellers willing to finance their property. This means that instead of getting a bank to finance the house, the homeowner or seller actually does it for you. You'll usually have a higher interest rate but the terms can be a lot more lenient. Perhaps you can live in the house for six months making payments as you would rent until a certain down payment is completed. You really can structure this type of loan any way you want as long as both buyer and seller agree. Sometimes you might not even have to pay anything for the first few months, allowing you to renovate the property without making payments. It's important to have either real estate agents and/or real estate attorneys involved so that everything is on the up and up, written up correctly, and everyone understands their role in the transaction.

Read More: How to buy your dream house when you weren't ready

What Are Some Low Down Payment Mortgage Options?

For first-time homebuyers or those with not a lot of down payment, you might be looking for options for a mortgage. Are there options that provide either zero or low down payment alternatives? If you can’t come up with a 10% or 20% down payment, as most first-time homebuyers can’t, starting with a low down payment option is really your best bet to getting into the real estate industry. Once you’ve built up some equity from your first home you can roll that into a conventional loan later on down the line when you upgrade the property. For now, low down payment or zero down payment options bite be your best bet. Here’s what’s currently available.

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