Can You Really Buy a Home with No Money Down?
No money down programs really do work.
You see the ads all the time, promising that you can purchase a home with no money down. The questions is, is it a gimmick or can you really get into your own home with no money down? Believe it or not, you can indeed get a home with no money down. It’s just a matter of knowing how to go about it.
First Time Homeowner Grants
One of the most popular ways to buy a home with no money down is to take advantage of a first time homeowner’s grant. Many non-profit organizations and local or state agencies will offer grants, gifts and down payment assistance to help with a down payment for your first home.
If you’ve never owned a home before, you may qualify for one of these grants. Qualification criteria vary from grant to grant. Sometimes your income has to be below a certain amount while other grants do not have an income limit. Check to see what types of grants are offered in your area.
Piggy Back Loans
Piggy back loans are another popular way of buying a home with no money down. A piggy back loan is an equity loan that is used to fund the down payment of a home. For example, if the first mortgage was covering 80 percent of the purchase price of the home, you could take out a piggy back loan for 20 percent of the purchase price of the home.
Using this no money down method, homebuyers are able to avoid paying PMI. PMI kicks in when your mortgage amount exceeds 80 percent of the home’s value. Because your first mortgage is only 80 percent, PMI is not required, saving you quite a bit of money each month.
100 Percent Financing
If you have great credit, you can get a home with no money down simply by financing 100 percent of the purchase price with your lender. Sometimes lenders are even willing to lend 103 percent of the homes purchase price in order to cover closing costs for the homebuyer. Just remember, to qualify for this type of no money down financing, your credit history has to be spotless.
While no money down financing may seem too good to be true, it actually does exist, making it easier for many people to purchase a home of their own.