There’s an old television program that aired in the 1960’s called Hogan’s Heroes. Sgt. Schultz (John Banner) was one of the main characters. His constant exclamation throughout his tenure on this show was, “I know nothing!” Is that where you are in regards to how to buy a home without a down payment? If so, you are about to become educated.
Believe it or not, if you have decent credit – and sometimes even if you don’t! – you have alternatives as to how to purchase a home without a down payment. Look at the following examples:
*VA Foreclosure Loans – What’s unique about these loans is that anyone can buy a VA foreclosed home with no-money down. You can find VA foreclosures through local real estate listing agencies, typically members of Multiple Listing Service (MLS). You can also do a search on the Internet for VA home foreclosures. You’ll find plenty. VA sells their own repossessed homes. If you are not a veteran or on active duty, however, you won’t be able to get a VA loan. Instead, you’ll be required to obtain your own conventional or FHA financing. Still, there is no down payment required.
*Owner Financing – owner agrees to be your mortgage holder. You reach an agreed-upon price with the property owner. A legally binding agreement is drawn up that includes everything a mortgage loan would include as far as price, duration of loan, interest rate and loan payments. The property owner accepts payments from you just like a bank or mortgage company would for a traditional loan. You are considered the owner of the home, since your name is on the title/deed, along with the mortgage holder as the lien holder.
*Assume a Mortgage – Some owners are having a very difficult time selling their homes due to the mortgage crisis. Many are willing to allow a buyer to assume their mortgage in order to get it sold. This allows them to get out of the mortgage to a certain extent and purchase another home. Of course, there are requirements that the buyer must meet before the mortgage company will allow the assumption. In order to assume a home loan you must qualify for the loan and pay closing costs.
*Lease/Purchase – This has been a popular one for years. You find property you are interested in not only renting, but buying. Sometimes property will be advertised as such. There are various approaches to this option.
*Owner agrees to accept all rent payments over a specified time period in exchange for a down payment. At the end of the specified time period you will have to obtain your own loan to pay for the remaining agreed-upon sale price of the property.
*Owner agrees to accept part of the rent payment over a specified time period in exchange for a down payment. At the end of the specified time period you will have to obtain your own loan for the remaining agree-upon sale price of the property.
*Owner agrees to lease the home to you at a discounted rate, and you agree to obtain a loan to buy the home at a specific price within a specific timeframe. The agreed upon price is typically more than if you were paying the market amount for rental.