How To Get A Home With No Money

Purchasing a home is one of the biggest investments you can make in your life. Unfortunately, it may come with a significant barrier—not having enough upfront money to put down at closing. Most people spend years saving for just the down payment for their dream home.  

However, what if there’s a way to get a home without money upfront? From loan programs to family gifts, this article shares some creative ways to make it work. Read on.

1. VA Home Loans

If you’re a veteran, active-duty service member, or an eligible surviving spouse, a VA home loan is the best option to get a home without upfront money. This type of loan is offered by VA-approved lenders like Security America Mortgage and backed by the US Department of Veterans Affairs. It has zero down payment requirements, so you can move into your dream home once you’re approved. Also, it has no mortgage insurance, providing you with a lower monthly payment compared to conventional home loan options.  

As a bonus, the VA also removed loan limits. This means eligible borrowers can purchase higher-priced homes without worrying about a down payment. VA loan borrowers are also exempt from certain closing costs, such as attorney and underwriting fees.  

Generally, you need a certificate of eligibility when applying for a VA loan. This certification shows your current duty status and service history to prove your eligibility. If you’re a veteran looking to build a custom home, some lenders may also offer you a VA construction loan. If you’d like to know more, visit securityamericamortgage.com.

2. Homebuyer Down Payment Assistance (DPA) 

For first-time home buyers, you may qualify for down payment assistance offered by government agencies and private organizations. DPA comes in the form of loans, grants, and other programs. It can be run by various organizations, such as a state or local housing authority or a nonprofit organization.  

Some of the common types of assistance are: 

• Grants 

• Zero-interest, deferred-payment loans 

• Zero-interest, forgivable loans 

• Low-interest loans 

In general, eligibility is determined by your credit score and history, and household income, varying by program and state. You’ll need to apply and may even be required to attend a home buyer education and training on the mortgage process and financial management.  

The amount of funding you’ll get will depend on the program. Some programs cap assistance at a specific dollar amount, while others offer a percentage based on your home’s sale price. When looking for grants and programs to apply for, determine their requirement and how much assistance you can receive.  

3. USDA Loans

The United States Department of Agriculture (USDA) offers homeownership opportunities to moderate-to-low-income families through various grants, loans, and loan guarantee programs. The government offers USDA loans and USDA construction loans to encourage the development of suburban and rural areas.   

Like VA loans, USDA loans are offered through private lenders and guaranteed by the USDA Rural Development. You can also get a USDA loan with zero down payment which comes with lower fees than other conventional loan types.  

That said, you and the home you’re looking at must meet a few criteria to qualify for this loan. First, the house needs to be in a suburban or rural area. The USDA provides a map of eligible areas. This way, you can easily determine if the home you’re considering qualifies. In addition, the house can’t be a working farm and should be a single-family unit where you’ll be your primary residence.  

In terms of your eligibility, you’ll need to meet a few financial requirements. These include:

• A debt-to-income ratio of less than 45%

• A household income of less than 115% of the median income of the state or county the house is in

• A Fair Isaac Corporation (FICO) Score of at least 640

4. Down Payment Gift

If you’re lucky enough to have a relative or family member gift you money, then you can use it for your home down payment. Just make sure that you carefully follow the requirements provided by your lenders. In general, you’ll need to provide a paper trail showing who gave you the money, when it was given, how they gave it to you, and proof that no repayment is required. 

Takeaway

As you can see, buying a house has become more accessible today. Gone are the days of needing thousands of dollars for upfront payment. So, if you don’t have immediate cash to get a home, don’t worry. Determine if you’re eligible for the above options so you can make your homeownership dream a reality.