How to Buy a House With No Money

Although one may typically imagine a flat desert-scape when picturing Arizona, the state contains a surprising variety of sceneries, from the famous red rocks and greenery of Sedona to the dazzling blue water of Havasu Falls. Home to stunning national parks and monuments, the Grand Canyon state is filled with nature experiences you cannot find anywhere else. It only makes sense that many want to live in such an awe-filled, nature-centric area.

Buying a home in Arizona may seem daunting at first, but with the right resources and information, anyone can make owning a home a reality. Buying a house is a significant financial investment, and even if you do not think you can afford it, you would be surprised at the options available to you. Let’s look at how to buy a house with no money.

Down payments are a standard part of the home-buying process but can also be one of the greatest obstacles that may make you think twice about investing in a home. However, there are ways to buy a home without a down payment. The federal government offers options for securing a mortgage with no down payment through government-backed loans. Let’s review the options for buying a house with no down payment.

The U.S. Department of Veteran Affairs offers loans to those who qualify. Potential recipients of VA loans include those actively serving in the military, veterans (members of the National Guard or Reserve), and spouses of deceased veterans. One important qualification to be mindful of is these loans typically have a credit score requirement. There are also other requirements based on military service. The minimum service requirement for an active military member is 90 consecutive days in wartime and 181 consecutive days in peacetime.

Backed by the U.S. Department of Agriculture, USDA loans are typically used as an incentive to buy a home outside of the city, such as in rural areas or suburban neighborhoods. Eligibility requirements are a little more extensive and include financial requirements such as household income and the average income of the surrounding area you are looking to live in.

Many lenders require a certain credit score to be eligible for a loan. If credit scores are a concern, there is always the option of an FHA loan. These loans are ideal for households whose income would be considered average or below average. While these requirements are less extensive than the previously mentioned loans, there are some important factors to keep in mind when considering an FHA loan.

For example, taking out an FHA loan on a home means you are committing to making that specific home a primary residence. The home should be up to the basic standards of living and will have a quick turnaround time upon purchasing; the move-in date is no more than 60 days after purchasing the house. Another important thing to consider is the payments you will be making with this kind of loan. You will most likely need to pay mortgage insurance until the loan is paid off (that is if the down payment was less than 10% of the price). FHA loans typically have a low down payment, which is why this requirement is included.

For those with concerns regarding income or credit scores, another great option is Fannie Mae HomeReady Mortgage. These loans are far more flexible and can even reduce a down payment to between 3% and 5% of the cost of the home. Other benefits of this type of loan include lower down payments, lower mortgage insurance payments, and the potential for canceling mortgage insurance once you have paid off a certain amount on the house. Another reason this option is more accessible for low-income households is the lower payments for mortgage insurance. Fannie Mae HomeReady was created with low-income households in mind, and it offers flexibility to make owning a home a reality for more people.

Freddie Mac Home Possible loans are often compared to Fannie Mae HomeReady Mortgage loans because they share a similar vision for creating affordable, accessible funding. As with many of the other options available, these loans are a good option for low incomes and first-time homebuyers. While Freddie Mac Home Possible offers more flexibility and lower payments, these loans are not as far-reaching and accessible as some of the other options. Not every lender offers these loans, and they are only available for primary residences, which means the buyer must plan to live in the home year-round.

Another option is to take out a conventional loan. For first-time home buyers, a conventional loan allows for a down payment of only 3%. It is important to note that a conventional loan has more requirements than some of the other options we have gone over. Factors affecting a conventional loan include credit score, debt-to-income ratio, and loan amount.

A conventional 97 loan allows a buyer to put down 3% for a down payment. The remaining 97% of the balance is where the loan gets its name. While this option has no specified income limits, the buyer must be a first-time homebuyer to qualify for this type of loan. Homebuyer education is also required for at least one of the buyers. As with some of the other loan options, the buyer must make the home their primary residence to qualify.

Buying a home is more attainable than you may think, and there are a number of options available regardless of financial circumstances. After exploring your options, the next step is to team up with an expert in the housing market who can help match you with the right program.

Michael Osborn’s impressive background (specializing in safety and building) and knowledge of the housing market makes him an excellent fit to pair you with your dream home. He can walk you through each step of the home-buying process and help you identify the best loan option for your circumstances. If you are ready to buy a home in Arizona or want to explore your financial options further, contact Michael Osborn of M.O.R.E. Homes today.