AN YOU BUY A HOUSE WITH NO MONEY DOWN?

If you are a millennial, you know how high down payments keep many young people like you from buying a home in Portland Oregon. You aspire to own your place but stay locked into the rental market far longer than you wish because you cannot afford the high down payment required to own a home in the U.S. Well, you probably aren’t aware that you can actually buy a house with no money on hand. In this post, you will learn how you can get your dream home with no money down!

Yes, you can buy a house with no money, provided that you can prove your ability to pay off the mortgage at a later time. There are no-down loans available out there, and you can easily avail them if you can prove that you have a steady source of income to allow you to repay the loan and all the fees associated with it in the long run.

Although it is far easier to get the home that you want with sufficient cash on hand, buying a home with no money is still possible. There’s a catch, though, as you still have to pay for lawn care, general maintenance, utilities, etc. to maintain the property. You will also have to pay for the cost of moving, decorating, etc. Needless to say, buying a home and moving into it require money. But if we’re only talking about the down payment needed to get started with the home buying process, there is definitely no reason you can’t get the home of your dreams.

How do you buy a house if you have no money?

Usually, people go for a mortgage when buying a house. If you go this path, you pay a certain part of the overall cost of the property as down payment. Then, you pay the remaining cost of the house every month as a monthly mortgage. While it is most common for home sellers to require a homebuyer to pay 20% upfront for down payment, there are many ways you can still buy your dream home without paying any down payment. Here are the mortgage programs you can get so you can buy your dream home with no money down:

·         USDA Loans

USDA loans let you buy a home in a qualifying rural or suburban area for zero down payment, provided that you meet income guidelines. These loans help make owning a home much more affordable, especially if you are living in any of the eligible rural and suburban areas and have a household income that falls within the USDA limits.

USDA loans are also commonly known as rural development loans. They offer an affordable mortgage option if you live in a qualifying rural or suburban area and want to buy a home. These loans are backed by the U.S. Department of Agriculture, so they are far more accessible than other loan options when buying a home. Unlike FHA and conventional loans, they do not require any down payment and allow prospective homebuyers to qualify for a loan even with a credit score as low as 640.

In most cases, the USDA monthly guarantee fee is much lower than FHA monthly mortgage insurance, and you are allowed to roll these fees into your loan. This means that if you already have a USDA loan, you are free to refinance it into a new USDA loan and get it as a 30-year fixed-rate mortgage. Remember, however, that you cannot refinance with a USDA loan if your current loan is a different loan type. 

·         VA Loans

If you are a veteran and you are not qualified for a USDA loan, then you have another option: a VA mortgage. Just like USDA loans, VA loans also offer 100% financing, allowing you to buy a home with zero down payment. One of the best things about these loans is that they do not require mortgage insurance, so borrowers like you get to save thousands of dollars every year. 

In the U.S., VA loans are the cheapest available today. But since VA home loans do not require mortgage insurance, they charge a one-time VA funding fee to help make the program self-sufficient. This fee is equivalent to 2.15% of the total loan amount, so if you are on a $200,000 mortgage, then your funding fee will be $4,300, which can be financed into the loan. 

If you are wondering whether or not you qualify for a VA loan, it hugely depends on the credit requirements of the lender. Usually, lenders require at least a 620 credit score, which is definitely not bad. Some small lenders require much lower credit scores than this. 

·         Navy Federal Credit Union Financing

If you are buying a home for the first time and you happen to be a member of the Navy Federal Credit Union, then you are likely to qualify for a no down payment home loan and no PMI. The goal of the Navy Federal Credit Union is to help first-time homebuyers like you realize your dream of homeownership in Portland now without having to wait for years to save a down payment. 

The union’s Homebuyers choice loans offer 100% financing on purchases, including home purchases. That alone makes them a great choice for homebuyers. 

Navy Federal Credit Union loans are characterized by fixed interest rates and consistent payments. With a fixed interest rate, you can be assured that your monthly payment to your principal and interest will stay the same for the entire life of your loan. These loans also do not require private mortgage insurance, which is very common among other lenders. Usually, lenders require borrowers to purchase PMI unless you can make a down payment of 20%. With the Navy Federal Credit Union loan, however, you won’t need a PMI to avail of the loan. 

Another good thing about Navy Federal Credit Union loans is that they allow home sellers to contribute up to 6% of the value of the home to your closing costs. This is quite a benefit for you as a homebuyer. These loans are also quite useful if you are looking to refinance your home but have low equity as they can refinance up to 97% of your home’s total value. 

Is a zero down payment mortgage right for you?

With sales rising, supply dropping, and pricing increasing in many cities in neighborhoods, today’s market looks pretty much like a bargain. That means now is a terrific time to purchase a home. Also, since rates for 30-year loans, 15-year loans, and 5-year loans are now cheaper than ever, the monthly cost of owning a home has also significantly lowered.

Despite that, however, the decision of whether to buy a home now or later still depends on you. Zero down payment mortgages let first-time homebuyers and repeat homebuyers buy property with no money required at closing—except the standard closing costs, of course. However, if you don’t qualify for any of the loans discussed in this article, you still have other options.

The FHA loan, HomeReady mortgage, and the Conventional 97 loan all offer low down payment options with as little as 3% down payment. Just like the zero down payment options we’ve mentioned earlier, these low down payment options also have their own share of advantages and disadvantages. Just as there are benefits to zero down mortgages, there are also benefits to putting at least a little money down on a purchase. For one, the amount you will need for your monthly mortgage will become less. Also, if your mortgage requires mortgage insurance, with more money down, your mortgage insurance will automatically cancel in a few years.

If you are buying a home in any of our Portland neighborhoods and are looking for an agent you can trust, call me, Anne Stewart, at 503-804-1466 today.