10 Ways to Buy a House with NO Money Down

No Money Down Piggy Bank - Saving for a Down Payment

Before you spend money on expensive programs that can teach you how to buy a house with no money, here are 10 ways to buy real estate with “no money down”. I am a master negotiator, who has made money of purchasing real estate with out a down payment, and furthermore with absolutely NO money at all!

If you’re self disciplined and willing to hear the word “no” many times before you get a “yes”, then maybe you can buy a house without a down payment.

1. First is to check out the many new zero down programs now available from lenders.

Especially if you’re a fist time buyer. There are many grants available to first time homebuyers. Federal programs, for example, HOME offers down payment and closing cost assistance. In Virginia, VHDA also offers grant money to first time homebuyers. As a reminder, a first time homebuyer is considered a person that has not had their name on a mortgage in 2 or more years.

Furthermore, you’re in luck if you’re a veteran. All VA loans are 100% guaranteed by the department of Veteran Affairs and are require NO money down.

Some people may not qualify as first time homebuyers nor may be military veterans. If this is you, then keep reading for more options below.

2. Negotiate the Sales Price to include a portion of the down payment

Offer the seller more than he is asking provided he is willing to accept the down payment in the form of a note.

In this case, you have an FHA loan, which is a loan that is insured by the Federal Housing Authority for 96.5%. Therefore, a financial institution will only require a down payment of 3.5%.

One way to ensure that you have the down payment for the property is to increase the sales price. For instance, you find a house that has an asking price of $150k, your down payment will be $5250 (3.5% of the sales price). Provided that the home will appraise for more than the asking price, then you negotiate for a higher price to include your down payment.

With this method, it is better to have your own money because it is good for the banks to see. So you could increase the purchase price to $155k and ask for 3% (or $4,650), which will leave you with a balance of $600 at closing. Combine this with the first option, to use no money down programs, and you will probably receive money back at the closing table!

3. Lease Purchase – Lease with the option to buy

Lease a property with the right to buy it at some future time. I have done this options with tenants in the past. This particular situation is ideal for some homeowners and perfect for renters that want to own, but need additional time.

Here’s how it works. Say you find a house that is $150k, you want to buy the house, but you don’t have the means. Whether it be credit or a down payment, you can reach out to the homeowner.

First, find out if they are willing to lease. If so, then provide for the rental payment to be credited towards the down payment if you decide to exercise your option.

For example, you agree to lease the home for 12 months. Each month, a portion of your rent payment credited towards a down payment for the home. So for a payment of $1250/mo, let’s say that $250 is placed in to an escrow account for your down payment. At the end of the lease, you should have $3000 to go towards your down payment.

4. Borrow money for the down payment

In no particular order, my number 3rd way to buy a house with no money down is to borrow the money. First of all, you can take out a 2nd mortgage. If you’re in Virginia, then VHDA offers loan combo packages for down payment assistance. You’ll have your initial mortgage loan, and then you’ll have a smaller 2nd mortgage made payable to VHDA

Next, if you do not need to prove your down payment source to an underwriter, then you can borrow the money from family, friends or a business partner. Promise to pay the money back! ONLY borrow money if you are not going through the underwriting process.

5. Borrow against a life insurance policy

Many life insurance policy’s let you borrow against the policy for the purpose of investing in real estate or other investments. Please read this article to learn more about borrowing against your life insurance policy.

6. Use other property as collateral

Create a note on existing property that you or a partner own and use it as the down payment for the property you are buying.

In particular, use this method if you own a piece a land and want to build a house. You can use the equity in your land as a down payment for the loan to build your dream house!

7. Home equity loan

Home equity loans are generally easy to qualify for as long as there is adequate equity in the property.

The last 3 remaining options are additional options that have worked for others in the past. Please read carefully.

8. Seller refinance

Have the seller refinance the property, receiving the cash he needs from the proceeds of the new loan, the buyer gives the seller a note for the balance of the seller’s equity.

9. Find an investor

There are many people who have money but no time. Their current profession keeps them too busy. Work out a deal where they put up the money and you split the profits when you sell.

10. Give them something they need

Win in doubt, BARTER. If the seller is planning to purchase something in the future that you own or can buy, use it as a trade. This can be anything such as furniture, boat or motor home.

All 10 of these methods are viable options to use when you’re trying to buy real estate. All of them do not work all of the time, however, apply the option that fits to your next deal. Click here to read another article about ways to finance a home creatively.