Four Ways You Can Purchase A Home Without Having To Raise The Cash For A Down Payment

If you are ready to become a homeowner, but don't want to spend your cash on a down payment, there are options you can explore to realize your dreams of homeownership. Considering different types of home mortgages, borrowing against your savings, and applying for certain programs are some smart ways to buy a home with no down payment.

1. Apply for a USDA Mortgage

A USDA mortgage is a type of loan available to buyers who purchase homes in certain rural areas. Check with a mortgage broker who specializes in underwriting USDA mortgages to see if your prospective property is eligible.

There are limits concerning your household income. This loan permits you to finance 100 percent of the price of the home in exchange for paying a one-time up-front fee and an annual fee. Fortunately, you can roll the amount of the up-front fee into your mortgage.

2. Use a Gift to Pay for the Down Payment

The smallest down payment allowed by the FHA mortgage program is typically 3.5 percent of the home's purchase price. However, it also permits buyers to use a gift from friend or family member for the full amount of the down payment.

If you know a relative plans to leave you an inheritance, talk to the relative to see if gifting you the money now is a possibility. Or, if you receive a significant amount of cash gifts around the holidays, save these gifts and use them towards your down payment. The gifts may come from multiple individuals.

3. Take Out a 401(k) Loan

Many 401(k) plans have provisions that permit account holders to borrow against their plans. The terms of the plan dictate how much you can borrow, but the limit is usually half of your balance or $50,000, whichever figure is more. Your plan also specifies how long you have to repay the loan. Most plans have repayment periods of anywhere from 5 to 15 years for funds borrowed for the purpose of purchasing a home.

One caveat about borrowing form your 401(k) plan is that it is considered a form of debt. Therefore, the payment needs to fit into your lender's required debt-to-income ratio. Your lender can tell you how much you can borrow without potentially sacrificing your ability to get a mortgage.

4. Check Out Grants in Your Area That Promote Homeownership 

Inquire with the local housing administration in your area to see if there are any grant programs designed to fund home down payments. Many of these programs are limited to first-time home buyers, those buying property in certain areas, and individuals who work in designated professions. If you qualify for a grant, you don't have to pay it back.

About Me

Learning About Loans and Financing

Hello, my name is Janessa Jarvis. Welcome to my website about loans and financing. On this site, I want to help you learn how to approach the loan application process. Acquiring a loan can help you make big purchases that would otherwise been inaccessible in the long run. You must approach the loan application process with purpose or you could end up confused about the proceedings. I will help you understand how to fill out your loan paperwork and submit the documents for a quick decision. Please feel free to come by my site daily to learn more. Thank you for coming by.



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