What if you’re interested in buying your own home, but there just isn’t enough cash in your bank account to do so? You’re not alone: plenty of American homeowners got their start by putting together creative strategies that allowed them to buy homes with no money down. While this type of borrowing strategy isn’t right for everyone, it can be an effective way to get into the market without spending the cash upfront. Read on to learn how to start a house with no money down and take the first step towards homeownership.
1) Buying a fixer-upper
When looking for the perfect first home, some people consider buying an as is or fixer-upper. For those who have never done this before, here are five things you can do to help get started and make the process more manageable.
First, set your budget by calculating how much you can afford per month. To figure out what you can afford, take your total monthly income and subtract taxes, health insurance premiums if applicable, and other fixed expenses (like car payments). Next, divide that number by 12. The resulting number is how much you have left over each month after paying all of your monthly expenses - which is how much you can afford to spend on a house payment each month. Then, research lenders in your area. Typically speaking, lenders work directly with buyers to offer loan programs that best suit their needs; so it's important to find one that offers a competitive rate and program options based on the loan you want. Some popular types of loans include FHA mortgages, VA loans and conventional loans. Make sure you understand what each type entails in terms of eligibility requirements, closing costs and interest rates so that you can make an informed decision about which type will work best for your needs and financial situation. Once you've found a lender you feel comfortable working with, it's time to find a home!
2) Applying for government grants
The first place that you should look for help is the government. There are local, state and federal programs that can provide assistance when it comes to buying a home. For instance, if you are a first time home buyer, the Department of Housing and Urban Development has several programs designed specifically for those who do not have the necessary funds available for their down payment. One of these programs is the First-time Homebuyer's Tax Credit which can be applied towards your closing costs as well as your mortgage insurance premiums. The second place you should look is through non-profit organizations in your area. There are many organizations out there that offer grants or low interest loans in order to help people become homeowners. They are especially helpful for first time home buyers because they allow them to bypass having a hefty down payment.
3) Renting out extra rooms
Renting out extra rooms can be an excellent way for first time home buyers to get started. Renting out space in your home will bring in some income while you continue searching for your dream home. Plus, if you have the space and need help paying off that mortgage, renting out rooms might be just what you're looking for. If this is something you’re considering as an option, it's important to look into all of the factors before jumping in headfirst. For instance, if you rent out one or more of your rooms (or even your entire house), are there any local zoning laws or other regulations that limit what type of business you can run? In most areas, you'll find that there aren't many restrictions on what types of businesses you can operate from your residence as long as they comply with certain building codes. As long as you follow these guidelines, though, room rentals could provide the financial boost that first-time home buyers are looking for.
4) Taking on a roommate
Renting an extra room in your home can help first time home buyers save enough for a down payment and other items necessary for their first home. Be sure you have a good landlord/tenant agreement in place, though, so both parties are protected. You may also want to check into renter’s insurance or renters coverage from the property owner’s insurance company before signing any agreements.
When it comes to saving up the down payment, it may be easier than you think if you use the right savings techniques! For example, saving just $100 per month can add up to over $10,000 in 10 years. And saving $200 per month over 10 years could net as much as $15,000 (or more) depending on interest rates at that point in time!
If you don’t have any cash saved up for a downpayment, you might also consider putting some equity from another property or future inheritance into your new home purchase. It's important to note that this option is not available for everyone, but it can help those who do qualify. Consider a family member who would like to help you get started in real estate investing by giving you the downpayment money or considering taking out a loan where the lender will give you back part of your down exchange fee when they sell the property. Finally, keep all of these options in mind when discussing your financial plans with someone qualified - like a mortgage advisor - because there's bound to be something that will work for YOU!
The top three most common ways people pay off their mortgages early are: Paying Extra Principal Every Month; Investing Additional Funds; Selling Their Home Before The Mortgage Is Paid Off