Real Talk Real Estate: Home Buying Hack: How to buy a home with NO money down

Everyone needs a place to live and buying a home is a significant milestone. The financial requirements of putting down large sums of money to buy a home can be a major barrier to making this dream become a reality. I often get asked about first-time home buyer programs, and while there are not actually “first-time” home buyer programs, there are several options available for those looking to purchase a home with no down payment. Essentially, this would be any loan program that offers 100% financing.

100% financing can be a great fit for some buyers and there are options that don’t deserve all the negative scrutiny. I firmly believe that if you are going to have to pay rent, and can qualify for a mortgage, you should buy a home.

You are spending the money regardless if you are paying a mortgage, you are slowly building equity, and that is valuable. If you are paying rent, you are building equity for someone else.

This week, we will explore various avenues that potential homebuyers can consider to make their dream of homeownership a reality. These loans are not predatory in nature and are all great places to start if you qualify.

A quick guidelines to help you identify whether you may qualify are credit and income requirements. Most lenders require 1 year of consistent income source, a credit score of at least 640 (some 580-639 lenders do exist), and no credit reported late payments within the previous 12 months. Knowing these details upfront should save you some unnecessary heartache.

If you think you may meet these criteria, you could be aligned just right to use one of these loans to start or upgrade your home ownership situation.

VA Loans: If you are a qualified veteran or active-duty military personnel, you may be eligible for a VA (Veterans Affairs) loan. These loans often require no down payment, have competitive interest rates, and no mortgage insurance fees. You will need a VA eligibility certificate to use this program

USDA Loans: The United States Department of Agriculture (USDA) offers loans for rural homebuyers with no down payment requirements. These loans are designed to promote homeownership in rural areas. Locally, this loan can be used in Thomson, Graniteville, Harlem, and several other very popular communities. Check out the attached MAP, everything outside of the tan marked areas may qualify for a USDA loan. USDA loans also have no mortgage insurance fees added to the monthly payment.

FHA Loans: While the Federal Housing Administration (FHA) loans typically require a minimum down payment, alone this is not a zero-down option, but this loan can be coupled with local down payment assistance programs, which will in turn make it 100% financing. Some states, cities, and nonprofit organizations offer down payment assistance or grant programs to help homebuyers with their down payment or closing costs. These programs vary widely, so it’s essential to research what’s available in your area and know what it takes to qualify.

Gift Funds: If you have family willing to help you buy a home, they can give you “gift funds” for the down payment on several popular mortgage loans. Just be sure to follow any rules and regulations regarding gift funds set by your specific lender.

State and Local Bank Programs: Often local banks have mortgage funds that they commit to spend in their community. Locally, South State and Security Federal have some really great programs offering 100% financing. Just be aware that location and income limits may be tied to these programs.

Before pursuing any of these options, it’s crucial to consult with a seasoned real estate professional and loan originator to understand the specific requirements, terms, and conditions associated with each option. And just a reminder, your credit score and financial situation will play a role in your ability to qualify for mortgage loans or assistance programs.

Now, who’s ready to see if they can turn that rent money into something more rewarding?

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