Can you buy a house with no money down?

Can you buy a house with no down payment?

The answer is a definite maybe…

But no money down does NOT mean no money out of pocket.

So can you buy a house with no money out of pocket? The answer is not likely.

There are two programs to purchase a home that are truly no down payment programs. The VA home Loan for our military personal, and the USDA Rural Development loan for homes in rural parts of the state. Everything else will need at least a little down payment.

No down payment home loans

Next are some down payment assistance programs. Most of these require you put in at least a little money, and you get an assistance loan for the rest. A typical number is at least $1,000 down out of your own pocket.

Low down payment loans come in many varieties, but the conventional HomeReady program is just 3% down payment, and FHA loans are just 3.50% down payment – all of which can be a gift from family members too.

While most people understand ‘down payment’, in the home buying world, you also have up-front out of pocket costs, like paying for a home inspection.

You also have closing costs, which include lender costs, title company costs, state and county costs, plus buying things like your first years home owners insurance.

Many of these items can be rolled into the purchase through either ‘seller paid closing costs’, or through something known as ‘lender credits.”

While these two options can help eliminate up-front out-of-pocket expenses, neither one is free.  Seller paid closing costs is achieved by raising the purchase price in an amount equal to what the seller will pay.  For example, if the house price is $200,000, and you need $6,000 is closing cost assistance, you would offer $206,000 for the home.

Lenders credits is where the lender will pay some or all of your closing costs by increasing the interest rate so that you pay it back over time, versus needing the money up-front today.

There are also costs NOT related to the loan.

Inspections costs have nothing to do with the loan, and having to write an earnest money check to the seller have noting to do technically with the loan. So even if you are doing a no down payment loan, like a VA home loan, with “all closing costs” rolled into the loan, you may still need $500 or so for an inspection, and and maybe a few thousand dollars in earnest money when making your offer. Any earnest money can be credited at closing, so you can possible get it back, but you still needed it up-front to buy the house.

Bottom line is that if you have no money whatsoever, you are probably not ready yet to buy a home, but if you have at least a few thousand dollars, or can get a gift, we probably have a program for you.

Call our MN, WI, and SD mortgage loan experts today at (651) 552-3681, or just APPLY ONLINE.

 


Down Payment Assistance Programs in MN

DOWN PAYMENT ASSISTANCE PROGRAMS

MHFA Start Up and Step Up down payment assistance programs in MN for First Time Home Buyers

Have $1,000?  Have OK Credit?  Than YOU can be a homeowner.

down payment assistance programs mnThe biggest hurdle for many first time home buyers is the lack of down payment money.  With the down payment assistance programs from the Minnesota Housing Finance Agency – you can buy a new home today, and be enjoying it next month!

TWO MINNESOTA DOWN PAYMENT ASSISTANCE PROGRAMS

START UP Program

The Start Up assistance program is for people who have NOT owned a home in the last three years.

STEP UP Program

The Step Up program is for people who currently do, or may have owned a home previously.  Both of these program assist with up to $10,000 is down payment assistance to those who qualify.  Most people get much less. Typically up to just $5,000.

MORTGAGE CREDIT CERTIFICATES

By adding a Mortgage Credit Certificate option, first time home buyers can potentially save up to an addition $2,000 on their taxes.

Click or call to learn more about the benefits of mortgage credit certificates in MN (MCC)

 WHO QUALIFIES FOR DOWN PAYMENT ASSISTANCE?

As with any assistance program, there are additional rules and guidelines that need to be followed.  Here is a basic list of requirements:

  • Credit score above 640 (middle score of all applicants)
  • Attend Home Buyer Education Class or take the online class
  • Meet family Income Limits
  • Buy an affordable home
  • Provide previous three years tax returns
  • Meet FHA, VA, USDA, or Fannie Mae / Freddie Mac underlying loan guidelines

The rules and guidelines for first time home buyer and down payment assistance programs in MN are a bit overwhelming for most potential new home owners.  We suggest you don’t try to figure it out yourself…  Rather, simply call us at (651) 552-3681, or fill out a full online application. Our licensed professional Loan Officers will review the application, zero in on the best loan for you, then contact you to discuss your options, all with NO COST and NO obligations whatsoever.

Click here For FULL RULES and GUIDELINES on the Minnesota Housing Finance Agency Down Payment Assistance Programs