A Free Resource Site For First-Time Home Buyers

How To Buy A Home With No Down Payment

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Guide to Purchasing a Home with No Down Payment:

Research and Preparation:

  • Explore the possibility of buying a home with no down payment through thorough research and preparation.
  • Understand the specific order of steps required for assistance programs available to first-time homebuyers.

Local Grants and Assistance Programs:

  • Seek local grant programs to assist with closing costs and/or down payment.
  • Local governments often support homeownership to enhance community strength and property tax revenue.

Understanding Grant Programs:

  • Grants may be considered “free money,” but they could also involve a second lien on the property.
  • Verify rules and guidelines before accepting assistance.

First-Time Home Buyer Programs:

  • Many locations offer first-time homebuyer programs, which may include loans with repayment requirements.
  • First mortgages from lenders may allow for a second mortgage provided by the government or non-profit to aid with the down payment.

Closing Costs Assistance:

  • Closing costs, including taxes, fees, and service charges, may require additional assistance.
  • Seller concessions may be negotiated, allowing the seller to contribute up to 6% of the sales price toward closing costs.

Example Scenario:

  • Home Sales Price: $200,000
  • Financing: 96.5% FHA home loan = $193,000
  • Remaining Down Payment: $7,000
  • Additional 4.5% for Taxes and Closing Costs: $4,500
  • Total Needed: $11,500

Structuring the Purchase:

  • Request seller 4.5% contribution to reduce the total amount needed.
  • Utilize a no down payment assistance program or grant for the remaining amount.

Federal Programs Offering 100% Financing:

  • USDA: 100% home financing for eligible buyers in eligible areas.
  • Veterans Administration: 100% VA home loan financing for eligible buyers.

Avoiding Common Mistakes:

  • Know expected closing costs before making an offer.
  • Identify and qualify for the assistance program or grant before making an offer.
  • Understand the impact of any associated payments on your mortgage qualification for no down payment programs.