Spoiler alert: This blog post will not show you how to buy a house with no money. If you are going to buy a house, you are either going to have to pay the full price up front or pay some form of monthly payment. So if you came to this post looking for a way to “buy a house” for absolutely free, you will not find that answer here. However, if you have a steady job or some other form of consistent income, this post may point you in the right direction on how to buy a house with no money in your savings (or at least very little).
A question that I have been seeing pop up on various real estate forums is “how to buy a house with no money.” As far as I know, there is really no way that you can purchase a home with absolutely no money (if you find a way to, please let me know). Obviously you can inherit a home or even have a family member or friend buy a home for you, but this is not what the question is asking. While I cannot show you how to buy a house with no money, I believe that it is possible to show you how to buy a house with no money for a down payment . For many potential home buyers in Ventura County, not only do you have to be able to afford the monthly mortgage payments, but you also have to provide a down payment. Even with a low down payment of 3.5% (FHA terms), you can easily be looking at over $10,000 for most homes in the county. There are some people out there who can qualify for a loan and afford the monthly payments, but they may not have enough money saved up for the down payment. While there are all types of ways you can get creative with financing, here are three ways you might be able to buy a house with no down payment out of your pocket.
How to buy a house with no money, tip #1
One way that you can come up with a down payment if you don’t have the money yourself is from family or friends. If you are fortunate enough to have parents who have enough money and are willing to give you the money, you can receive a gift from them and use that as the down payment. Most, if not all mortgage lenders have guidelines on where the down payment comes from and how long it has to “season” in an account, so make sure you are upfront with whichever bank or lender you will be receiving your mortgage from. That way, you can make sure that you adhere to all their guidelines and that your loan does not fall through unexpectedly because they find something in your financials that they don’t like. It may also be possible to borrow the down payment from family or friends, but most lenders will see this as another loan on your account and some might not even allow it in the first place.
How to buy a house with no money, tip #2
Another way to come up with a down payment is to borrow money from your retirement plan. Depending on your plan, it may be possible to borrow a certain amount from your 401k to be used for the purchase of a primary residence. One of the retirement plans that I am familiar with allows you to borrow up to $50,000 to be used as a down payment on a home. You then have up to 15 years to pay off the amount borrowed plus interest. This money is usually deducted out of your paycheck automatically and paid back to your retirement account. The lenders that I have worked with do not even see this as a loan that counts against your debt-to-income since it is taken out of your paycheck prior to you receiving your salary (the flipside is it reduces your monthly income and the loan amount you qualify for). Used correctly, borrowing from your retirement account is a solution for how to buy a house with no money.
How to buy a house with no money tip, #3
The California Housing Finance Agency offers several loan programs to Ventura County residents. Two of the programs that can help you buy a house with no money are the MyHome Assistance Program and the Extra Credit Teach Home Purchase Program (ECTP). Both of these programs provide deferred-payment junior loans that can be used for a down payment that you do not have to make payments on until the home is sold, refinanced, or paid in full. They both have their own requirements and each must be used in conjunction with a CalHFA first mortgage loan. I invite you to check out the CalHFA website and not only read about these programs, but to see what other programs they offer to Ventura County residents.
We hope that you found this post helpful. As stated upfront, although we did not show you how to buy a house with no money, there are ways that you can buy a home if you cannot afford the down payment. No matter what you do, always be honest with your lender and let them know what your plan is for the down payment. The last thing you want is to think that you will be approved for a loan and have them reject you down the road after they take a closer look at your finances and where you will be getting the down payment. For additional information about finding a good lender, check out these 25 tips for finding the best mortgage.