How to buy a house with no money down?

[Peepa]

Any of you go this route? More and more we''re thinking we need a yard for our baby (doggie) and future babies (human). Please share any tips you may have. And Happy Friday guys!

 

[Pandora II]

I don''t know about the US, but in the UK you have to have a minimum of 10% deposit and at the moment lots of banks are asking for 20% deposit.

 

[angiety2k]

I am currently doing this all we need to close is 2,000 to 4,000 by using sellers assist basically all you need is you both have good full time jobs.

 

[Peepa]

EricsPrincess, how did you do this? Is there a site I can learn more about it?

 

[angiety2k]

I have never seen it on a web site we are working with a normal Real estate agent. They really don''t want to show to many houses until you get pre approved. I would call and ask about 100% financing, we just happened to know our agent so she told us about it.

 

[DivaDiamond007]

I feel your pain, Peepa. The housing/mortgage market in my area sucks big time and has been really hard hit with foreclosures, declining values and declining sales. I think a lot of it depends on your credit and income. Obviously if your credit scores are low (below 600) and if you don''t have good, stable jobs (if there is such a thing) then you have to put at least 20% and maybe more depending on your credit history. If your scores are good (600-670) with stable jobs then at least 10% down and if your scores are "excellent" (680+) and you have good jobs then less than 10% down can be possible.

Off topic, but important:

I work in bankruptcy and that can complicate things a bit - these days you have to wait until 2 years after filing to get a conventional loan and be 2 years from discharge for an FHA loan. At that point, the bankruptcy won''t affect the interest rate and it is unlikely that you will be able to get any loan before the respective 2-year marks. Also, a lot of it depends on how the person has rebuilt their credit after the bankruptcy.

Jess

 

[Independent Gal]

Call your bank and a few other mortgage companies and ask them. They are the ones who will be loaning you the money.

My guess is that you also need fabulous credit at this point, not just full-time jobs. Banks would be CRAZY at this point to finance a mortgage 100%, given the volatility of house prices. The thing is, if you default, and the price of the house has gone down, the bank loses their money. Given the teetering-on-the-brink-of-collapse condition of the mortgage industry at the moment, I think this would otherwise count as "irresponsible lending."

When the banks keep losing money from mortgage defaulters, the economy as a whole - and hence everyone suffers!

 

[sumbride]

This is why the mortgage crisis is such a big deal right now... people can''t afford their houses because they got into more than they could handle. If that doesn''t apply to you, but you just don''t have the ready cash, what you get is an 80-20 loan. It''s essentially 2 mortgages, one for 80% and one for 20%. It''s fairly common, as is the foreclosure resulting from it.

We did a 10% downpayment courtesy of DH''s 401k loan, but if he leaves his job before it''s paid off he has to pay it back in full at that time. We also did an 80-10, but the 10 is a home equity line because we had "instant equity" when we bought. That rate has been varying lately, but it''s almost paid off so we''re ok. Just be VERY cautious.

 

[Kismet]

Rent to Own may be an option for you.

 

[TravelingGal]

No offense to the OP but...

Am I old fashioned? Am I the only one who believes these days that buying a home should require SOME form of discipline when it comes to saving for some kind of a downpayment? Almost 2.5 years ago TGuy and I said we wanted a house. We set a goal to save 100K in 4 years and are over halfway to our goal. Was it easy? No. It took a lifestyle change and while it hurt at first, we are used it to now and feel comfortable that we can actually AFFORD a mortgage, even if one of us were to lose our jobs.

So many of these crazy loans is what got this market in trouble in the first place...and what ran up housing here in California so that the responsible ones can''t even afford a home now.

Rant over and apologies to the OP as I know I really didn''t answer your question.

 

[neatfreak]

TGal: You are not alone. I think the same thing but since I already got yelled at for making a comment about the impacts of defaulting on taxpayers in another thread, I am keeping my mouth mostly shut here!

 

[DivaDiamond007]

Date: 5/9/2008 2:01:36 PM
Author: Independent Gal
Call your bank and a few other mortgage companies and ask them. They are the ones who will be loaning you the money.

My guess is that you also need fabulous credit at this point, not just full-time jobs. Banks would be CRAZY at this point to finance a mortgage 100%, given the volatility of house prices. The thing is, if you default, and the price of the house has gone down, the bank loses their money. Given the teetering-on-the-brink-of-collapse condition of the mortgage industry at the moment, I think this would otherwise count as ''irresponsible lending.''

When the banks keep losing money from mortgage defaulters, the economy as a whole - and hence everyone suffers!

Okay - I don''t want to start trouble so I will make one comment on this and then shut up about it. They DON''T lose their money when a buyer defaults. They write it off on their taxes! Same thing with CC companies and the like. If they are losing money it''s not nearly as much as they make it seem to the public. I see this happen everyday in my practice. Also - check out the profits these places are making - CC companies still profit in the BILLIONS despite all the "credit woes" going around. True, some mortgage companies surely have gone under - but take a closer look at their lending practices and it should come as no surprise. The "credit woes" will certainly be passed onto consumers by way of stricter lending practices and possibly higher rates - the same way stores raise their prices due to shoplifting. Gotta cover their butts too.

The mortgage crisis definately goes both ways - buyers should NOT purchase homes they can''t afford to begin with and should not be approaching a mortgage with an inflated appraisal, BUT the mortgage companies have a responsibility to give loans only to those who can afford to repay - and THAT is what got the U.S. into this big mess. Doesn''t take a rocket scientist to figure out that someone making 50K a year can''t afford a 300K or even 200K mortgage. DUH! In the forever downhill job market if you can''t afford the max. rate on your ARM now then what makes you think you will be able to afford it later? ARG! The whole situation makes me sooo angry

RANT OVER

Tgal - I tend to agree that you should have some sort of downpayment when purchasing a home - but the fact of the matter is that not everyone has the means to save a ton of money in order to do so. My husband and I have some savings - just a bit out of each paycheck and then a bit more with tax refunds, gifts, etc. We live within our means, pay our bills on time, have very little consumer debt (student loans and a car loan) and are otherwise financially healthy. For us (and many) to save say 20% down on a 100K home would take years and years and years and by the time the money was saved it would probably not even matter. Sad but true. Even with the savings that we are able to do it does not amount to be enough for a downpayment on a home.

I suppose another option would be to see if a family member or friend could gift you the money for the downpayment and repay that person. I know if/when DH and I buy our first house we will be getting help from family as far as the downpayment is concerned.

 

[TravelingGal]

neatfreak, I haven''t read that thread...but yeah, people don''t like to talk fiscal responsibility sometimes...

Diva, I am not saying a huge downpayment. I am saying *A* downpayment. Even a small one to show some responsibility. I know for some saving a ton is impossible (usually do to bad choices and large consumer debt), but if my cousin who makes only 28K a year can save 10K, then I think most could save at least a few thousand for a few years. People these days are way into instant gratification. Yeah...I''d love to be raising my daughter right now in a house with a washer and dryer, but we still need to save and buy wisely. You don''t *have* to have a house with yard and plenty of room. It''s just what people WANT.

 

[ljmorgan]

Date: 5/9/2008 1:06:31 PM
Author:Peepa
Any of you go this route? More and more we''re thinking we need a yard for our baby (doggie) and future babies (human). Please share any tips you may have. And Happy Friday guys!

Hey Peepa, unless you have a good chunk of money set aside somewhere that you just don''t feel like using for a down payment, I would advise against trying to purchase a house with no money down. I say that because it is a very unsafe idea to purchase a house if you don''t have cash reserves. If you don''t have any money set aside, now is the time to start!

 

[sumbride]

There are occasions when it is necessary. In our case, DH was the only one on the loan because we weren''t married yet and my money was staying in my pocket until we were. I paid rent, which he knew he could count on toward the mortgage, but we didn''t have a lot of cash at the time because we were living separately and our rent was over $1100 each. We''ve saved quite a bit since moving in together and we pay more than required on the mortgage/HELOC. The rents here weren''t allowing us to save, and purchasing a house was on DH''s list of things to accomplish before marriage, so we did what we had to do. I certainly don''t recommend it to everyone, but not all situations are the same.

 

[DivaDiamond007]

Date: 5/9/2008 3:45:52 PM
Author: TravelingGal
neatfreak, I haven''t read that thread...but yeah, people don''t like to talk fiscal responsibility sometimes...

Diva, I am not saying a huge downpayment. I am saying *A* downpayment. Even a small one to show some responsibility. I know for some saving a ton is impossible (usually do to bad choices and large consumer debt), but if my cousin who makes only 28K a year can save 10K, then I think most could save at least a few thousand for a few years. People these days are way into instant gratification. Yeah...I''d love to be raising my daughter right now in a house with a washer and dryer, but we still need to save and buy wisely. You don''t *have* to have a house with yard and plenty of room. It''s just what people WANT.

I agree that any downpayment is better than none at all. I know what you mean about the instant gratification too. So many people want so much immediately and that''s not how it always works out. For now DH and I are happy in our 760 square foot home with no dishwasher, small yard, old kitchen and outdated bathroom. If we buy the place then we''ll make improvements as we can afford them.

Honestly, I don''t even know exactly how much is in our savings because it''s stashed in an envelope in our house and we''ve never counted it! We''ve been saving for about a year now. We figure it''s better than nothing and really wanted to pay off some CC debt first and that''s exactly what we did. Very freeing to not be tied down to the CC company!

Peepa - if you have good credit scores (680+) call around to different mortgage companies and see what they can offer you. Most FHA loans only require a downpayment of 3% (I''m pretty sure) which may not be that much depending on the purchase price of the house you want to buy. I also agree with the poster that suggested rent-to-own or a land contract. Just get everything in writing or it can come back to bite you!

Jess

 

[icekid]

Many many of the problems we are having right now can be directly attributed to the fact that Americans feel they are entitled to live the high life. They DESERVE a big house, a huge SUV, plus an enormous TV. Moreover, they deserve it NOW. Who wants to wait? And screw everyone else, because they''re not ME.

I wouldn''t personally ever consider buying a house without a downpayment. given the current market? absolutely not! You''re just setting yourself up for future problems.

neatfreak- I agreed with you

 

[anniee19]

I purchased my first home in January, with 100% financing and no down payment. It was an inexpensive fixer upper type house, and before that, I was paying more to rent an apartment, than what I currently pay on my mortgage. To save up for a downpayment would have taken me a long time at my income level. To me, it felt absolutly ridiculous to be throwing away hundreds and thousands of dollars a year for an apartment, and in the end once my lease was up and I moved out, what did I have to show for it?? Nothing!
I got an FHA loan, and the seller (which was a bank- it was a forclosure house) paid all closing costs (about $2000) and also the 3% down payment (down payment assistance), which FHA requires. I also got a great APR rate. And my credit is just okay- I'm only 22 years old. My out of pocket costs added up to about $1500, and now 3 months later, I own my own home, my own yard, etc. and I pay less per month on my mortgage than what I payed in rent at my apartment. For me, living on a limited income, this has worked out great. In 3 years if I want to sell it, I will, and be able to use some of that on a downpayment for a larger home.
I would also suggest looking into assistance programs. There are many around here, depending on the city you live in. Most have income limit restrictions, but will help you to get a loan that wil work best for you.

 

[janinegirly]

I think you will find a very difficult time finding such a deal unless it''s some shady scheme.

The way the market is now, banks are tightening their requirements, not coming up with new products to allow buyers to put down 0! Most banks are wary of lending anything more than 80%, so I would think a 10% down mortgage would be hard to come by (particularly if you both do not have perfect credit), let alone 0!

If you can''t afford it, do not do it. Your dog will manage...

 

[angiety2k]

Please don''t get discouraged. I do have good credit, always paid all my bills on time in full, same with my FI. FI and I do have good jobs and our preapproval was way over what we could afford. Please live within your means, we are currently waiting on a house that we have put a offer in which the monthly payments are 50-70 dollars over what we pay in rent. Also because we are going with the 100% financing we will be paying a security installment of 30 dollars a month.(which is included in are monthly payments)


The reason why we chose this route is because we only want to live there for 3-5 years then move back to our home town. This way we will have thousands of dollars but into a house to buy another home (so really making that the down payment)This way will save thousands by not renting. If we lose money in closing costs then we still saved more than by renting. Good luck!! Its working out for me so far

 

[Tacori E-ring]

I didn''t read everyone''s responses but the state I live in just stopped doing 80/20 or 100% financed. No longer are the good old days of stated income loans as well. I think the best you can do (unless they have special government programs for first time home buyers) is 10% down. Even a lease with an option to own requires a deposit to "hold" the purchase price. Call a local mortgage broker.

 

[neatfreak]

Date: 5/9/2008 3:55:14 PM
Author: icekid
Many many of the problems we are having right now can be directly attributed to the fact that Americans feel they are entitled to live the high life. They DESERVE a big house, a huge SUV, plus an enormous TV. Moreover, they deserve it NOW. Who wants to wait? And screw everyone else, because they're not ME.


I wouldn't personally ever consider buying a house without a downpayment. given the current market? absolutely not! You're just setting yourself up for future problems.


neatfreak- I agreed with you

THANK YOU. I felt like an idiot because no one really backed me up, so I just let it drop. I appreciate the comment.

 

[bee*]

Date: 5/9/2008 5:41:17 PM
Author: neatfreak

Date: 5/9/2008 3:55:14 PM

Author: icekid

Many many of the problems we are having right now can be directly attributed to the fact that Americans feel they are entitled to live the high life. They DESERVE a big house, a huge SUV, plus an enormous TV. Moreover, they deserve it NOW. Who wants to wait? And screw everyone else, because they''re not ME.



I wouldn''t personally ever consider buying a house without a downpayment. given the current market? absolutely not! You''re just setting yourself up for future problems.



neatfreak- I agreed with you

THANK YOU. I felt like an idiot because no one really backed me up, so I just let it drop. I appreciate the comment.

I agree with both of you also. Over in Ireland, most of the banks have started to stop doing the 100% mortgages and there has been talk of negative equity with quite a few properties.

 

[Rhea]

Due to the mortgage crisis and sub-prime loans in the US you can no longer get a mortgage in the UK without at least 10% down. To get a 2 bedroom, 1 bathroom, terraced house in our area that''s at least $50K plus another $6K or so for fees. Banks and lenders would prefer more than 10%, most appear to want 15-20% for first time buyers.

I don''t know if a 100% mortgage is possible in the US. If so, I''m slightly jealous. We live in a one bedroom flat with a living room that only fits a love seat, a kitchen that is 6x6 feet, and I commute over 3 hours each way to work everyday so that we can save to afford our 10% down.

If it''s not possible to get a house with no money down you may want to consider downsizing to save money quicker.

 

[robbie3982]

DH and I just bought our house with 100% financing and 3% seller assist for closing costs at the end of March. We had money saved, but putting down 3% (the lowest amount that would've made a difference in our interest rate) would have left us with barely anything left in savings (not counting our emergency fund) and it wouldn't have changed our monthly payments by enough to matter (it would've taken over 6 years of putting what we saved from making a downpayment into savings to make back the money from the downpayment).

Sure we'll end up paying more for the house in the long run, but there's a very good chance that we'll be in this house forever and I'm much more comfortable with having our money where I can easily access it should we need it.

ETA: I heard right around when we were closing that it was going to be getting harder to get 100% financing. We used a mortgage broker (DH's brother).

 

[Pandora II]

Date: 5/9/2008 5:53:49 PM
Author: bee*


I agree with both of you also. Over in Ireland, most of the banks have started to stop doing the 100% mortgages and there has been talk of negative equity with quite a few properties.

Don''t!

FI and I have to remortgage by the end of the month as our current deal comes to an end. We both have prefect credit scores, good steady jobs, no debts of any kind except the mortgage and pay our CC bills off in full every month.

We have an AIP with HSBC at the moment and just heard tonight that they are rejecting 8 out of 10 applications - even with perfect scores.

We should know in a couple of weeks if we''ve got it or not.

Then we start all over again to get a mortgage for the new property. Aaaarrgggghhhh - I''m afraid banks who lend too easily and people who borrow more than they can afford are not my favourite people right now!

 

[MichelleCarmen]

.

 

[MichelleCarmen]

Date: 5/9/2008 3:45:52 PM
Author: TravelingGal
neatfreak, I haven't read that thread...but yeah, people don't like to talk fiscal responsibility sometimes...

Actually it was me who started the thread neatfreak is speaking of. My husband and I are not late on our mortgage, but thought for a short time the best decision was to walk. My husband lost his business. Our house is currently on the market and we're hoping it sells. It really sucks that I was bashed without the entire picture being painted. My husband made GREAT money and we could afford our loan, but now fear we cannot after another six-eight months so we're just crossing our fingers it sells w/in three months or sooner.

I was highly offended by someone assuming we were irresponsible so I asked that the thread be deleted.

 

[MichelleCarmen]

Date: 5/9/2008 5:41:17 PM
Author: neatfreak


THANK YOU. I felt like an idiot because no one really backed me up, so I just let it drop. I appreciate the comment.

You didn''t even know the entire picture! I thought it was rude for you to blame me for tax payer problems based on assumptions.

 

[neatfreak]

Date: 5/9/2008 8:25:51 PM
Author: MC

Date: 5/9/2008 5:41:17 PM

Author: neatfreak



THANK YOU. I felt like an idiot because no one really backed me up, so I just let it drop. I appreciate the comment.

You didn't even know the entire picture! I thought it was rude for you to blame me for tax payer problems based on assumptions.

Look, all I knew is what you posted then, which was that you guys were walking on your mortgage because you wanted to be able to save more $. THAT is what you originally posted, and THAT is what I made the comment on. If you don't want people to comment on things like that, then you need to put it in more context. All you said originally was that you guys were walking because you decided your mortgage was too much. And I really think that is wrong on so many levels that I had to comment on it.

Based on that, I DO think it's irresponsible to walk away from a mortgage and THAT is what I was commenting on. In case you didn't notice I *also* did say in my original post about it that the circumstances were different if you lost a job, which you later said your husband did. So thus, my comment didn't even apply in your situation as I mentioned in the first post I made.