Can I Buy a House with No Downpayment?
With all the good, national news of the real estate recovery I have been asked this question a lot in the last month. The good news is that if you live in the Dallas/ Fort Worth area, the answer is “yes”! However, that is not an unconditional “yes” just yet. There are three ways to purchase a home without a down payment.
The first avenue to do this would be to obtain a VA loan. I’m sure you’re thinking, what kind of loan is that? With all the talk of FHA, VA, 203B, 203K, ABC (J/K), it’s hard for you the consumer to understand it all. VA is a loan specifically for Veterans that allows them to use their veteran benefits to obtain financing for a home.
The next way to purchase a home without a down payment is by purchasing a rural home with a USDA loan. USDA is the United States Department of Agriculture. This loan is geared to help encourage people to purchase homes in rural areas. The home must be in an eligible area. You can check individual properties and view city boundaries here:
Only some lenders can participate in this program so be sure to ask your amazing Realtor for recommendations.
The third way to purchase a home without a down payment would be to go through the Texas First Time Home Buyer program. The state has a specific amount of funds available to make this happen for you, the home buyer. As with all loan programs, you must qualify to meet their standards and not all lenders can lend through this program so be sure to ask for recommendations prior to having your credit pulled if you’re thinking of going this route.
You can find more information on this program here:
One thing to note when reading this information, is that while in some cases you may receive 5% in assistance, that typically will cover only your down payment as there are additional fees to use this program and the other 1.5% tend to go towards that.
Now, you’re probably thinking “That’s great! I can buy a home with no money!” but there is one more thing to consider: closing costs. When you purchase a home, you need money for a down payment but in your case you’re trying to avoid that which is great. However, lenders will still want to see that you have “rainy day” or emergency funds set aside and you will need money for closing costs. Closing costs are the fees associated with obtaining a new mortgage, title work and transferring/ recording the deed. These costs vary from state to state. You can ask a seller to pay for these costs for you and in most cases they will. Just remember that what you’re asking them to pay for you is coming out of their own pocket so you will want to be sure and keep that in mind when offering to purchase their home.
Still have questions? Feel free to email me at AngelaSellsDFW@gmail.com.