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@Al393: My BIL and SIL bought a house without a down payment. They used a rural housing loan which restricted where they could look but helped with getting them a house.
When we bought our first home almost 5 years ago it was possible with a FHA Loan. But from what I've heard around the boards that is no longer feasible.
Not sure if there are any types of state/federal programs out there. But I'd imagine for those you probably need to fall below a certain income bracket?
GL!
It is possible if you get a FHA loan in a rural area. There might be other ways, but that is one that I know of. Regular FHA loans require 3.5% down. But while you might be able to get a loan with 0% doan, you still need savings. I just bought a house in July, and the unexpected expenses of owning vs. renting are pretty significant. It's not just what your rent was vs. what your monthly mortgage is. You also have to think about closing costs (for my house, not including downpayment, they were several thousand dollars.) You might be able to find a seller to pay them, but with a lot of sellers taking loses on their homes or getting bank-owned homes, this might not be an option. I would start saving now and get pre-approved for a mortgage, then start looking and see if it's even feasible. Good luck!
I believe people used to be able to get a loan without a downpayment but with the current economy / housing crisis, I'm pretty sure that option is no longer available.
Even if it was, personally I don't think it is at all smart to buy a house if you haven't been able to save enough money for a down payment. Houses come with lots of surprise costs and you have to be able to have a savings fund available for when the HVAC unit quits, the fridge gives out or the roof starts leaking. If you have no money for a down-payment then you also don't liekly have enough money to be prepared for the expenses that go along with owning a home.
We bought a house through USBank and they have a program called 'American Dream' so if you live near one...definitely check it out. I think we ended up paying a grand total of about $600 to buy our house last February.
We're working on getting a 0% down loan, DH's best friend did it too. We're only looking in rural areas so I guess that's why we're eligible. A lot of people have personal reasons for needing to get a house when they can't save up thousands of dollars for a down payment, that doesn't mean you can't afford the costs that come with a house. We're saving up for closing costs, inspection, repairs etc.
We're working with a bank that specializes in these type of loans.
I really wouldn't recommend it, but I suppose it's better than renting. (I have no idea if it's possible, though.)
Out of curiosity, for those of you who have gotten a 0% down loan in the last year or so did you have to fall below a certain income bracket to qualify?
I know that there is a FannieMae sponsored program that will let you buy a foreclosed home for 3% down. You can get a decent place for not a large amount of deposit.
@Al393: Rural is non-city (city=urban). So, small town or in the country.
I wouldn't reccomend buying a home without putting something down. I'm not an expert, but I don't think you would be able to even get a loan without some money down.
In Oregon there's something called the "Dream Savers Program"... my friends did this, paid a total of around $1k (I think it was $200 a month for a year into a savings account, but it doesn't have to be that much) & the program matched 4x that amount for their downpayment (sometimes they do 2x or 3x). You also have to go to a class, but I think it was just one class, maybe two & they weren't that long. The whole purpose is to teach you how to save & to show that you're reliable & make payments regularly. So if you think you can wait to buy a house, this is a GREAT program!
In my opinion, if you buy a house but don't have money to put anything down, you shouldn't be buying a house. That's one of the biggest reasons that caused our housing crisis. It just isn't financially smart.
FHA loans can allow you to qualify to buy a house for as little as 3.5% down. However, there is a catch in that you will be paying PMI, which is mortgage insurance. Basically it is insurance you pay to the mortgage company so that your loan is insured until you get your loan to home value (commonly referred to as LTV) below 80%. At this point you no longer require PMI. However, bear in mind that with a 3.5% down FHA loan it will likely take you 8 or so years to break the 80 LTV point, that is unless you live somewhere where you can expect quick appreciation in value.
We got our home last year using an FHA mortgage, our house was purchased for $212k and we still had to come to the table with $13k for closing costs. So I think even without any down payment you should still plan on having a couple thousand for closing costs unless you plan to make offers which include closing costs.
Good Luck!
I'd advise against this. Having a house is so much more than mortgage payments. Rent until you have some savings and then look into it.
I think it's fine and an ok move as long as you can afford the mortgage and have a fixed rate instead of an ARM. That was the problem - people banked on refinancing and took out equity loans thinking their house value was going to go up like crazy like they had been for a few years.. they got adjustable rates that suddenly sky rocketed and all of a sudden couldnt afford them + market crash. Just make sure you are prepped for the long run of owning the home, and not just looking in the short term for the sake of ownership.
Talk to experts in your area, but I would think you could safely renew your lease for another year and save up some more money, without risking that home prices and/or interest rates are going to rise significantly. I know it might be possible to get a zero-down loan, but I agree with PP's that it's not a good idea. Where I live (NYC) lenders will not accept less than 20%.
There are special programs out there for very low downpyments (VA, FHA, firefighters/teachers/police living in the community where they work, rural areas, etc.). If you qualify for one, cool. But you will still be throwing money away on mortgage insurance for a long time. Have your calculations looked at the cost of just the mrtgage, or have you factored your annual property taxes and home owners insurance in, too? They can be hefty expenses, so don;t overlook them. And if you did one of these programs, what sort of safety net would you have in the bank for major house or life events? You should always have 6 months worth of living expenses, in cash, just hanging out in your bank account. Life happens, and you need to be prepared for it, especially when you own a home. Water heaters break without notice, storms and tree branches through your roof happen, etc.
If you become a homeowner, you are going to need cash. Even if you don't have a downpayment saved, closing can cost several thousand $$'s and there are other expenses like moving, buying new furniture, renovations even if they're just cosmetic. So if there's no way for you to save even some emergency money in the next couple of years, I would say continue renting.
I've heard of $0 down payment mortgages, but not lately. In fact, people were shocked to hear I was able to get a mortgage even with a 30% down payment and good credit score. So it might not even be an option right now..
I don't think there is a problem with a low down payment on its own. I think the problems that caused the housing crisis were people buying homes they could not afford, and 0% downpayments were part of what allowed those people to buy homes. For many, a downpayment is a signal of your financial stability. If you have the cash to close, and a good amount to handle expenses as well as job security to continue paying your mortgage you are probably ok. If buying a house with 0% down is getting you in way over your head, then rent until you feel stable enough to take on the obligations of being a home owner!
Here in BC, you can't buy a house without a downpayment. Before we could be approved for our mortgage, we had to show proof that we had cash equal to a 5% downpayment plus the property transfer tax (has to be paid in cash the day you take possession of the property). That worked out to be 6.4% of the purchase price of the house.
@moderndaisy: I agree 100%, there are so many costs with owning a home. You will probably have higher utilities, property taxes, maintenance and repairs, new furniture and things you just want to do like paint (which costs hundreds). Plus you usually do need to have a few thousand for closing costs even if the seller covers their portion, since you still have to pay your own prepaid insurance/taxes/interest.
I would wait until you have a bit saved even if you could possibly get a loan for 0% down in a rural area (basically an area that isn't very developed). I know some people who have gotten those but I think it's so much better to have some skin in the game to get lenders more willing to lend. Also, the fact that you just started your job is a no go, they usually want paystubs for the past few months to guarantee income stability.
We had a really hard time getting a loan with great credit and 20% down, it's super hard to get anything right now.
My husband and I are in the process of buying our first home. We decided to go with the Rural Development Loan and we did not need any money down. We also locked in with a really low interest rate-3.75%.
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Hi all
My husband and I are renting an apartment for sometime now and our lease ends in the summer. We have been thinking to buy a house instead now that houses are cheaper and our money will go towards owning a house instead of paying more on renting.The thing is I just started a new job and we have not really got the time or money to save enough for a down payment , so we cant really offer that at all. Is it still possible to buy a house? Is it smart to do it that way or wait until we save for a downpayment ? Any out there bought a house without a down payment?