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Homes & Land Blog > How to Buy Your First Home with No Money Down


How to Buy Your First Home with No Money Down

Buying your first home is a big step and it can be a bit overwhelming.  It’s probably the most expensive purchase you’ll ever make.  A lot of people don’t have nearly enough money in savings to make such a purchase or even enough money for a down payment.  What do you do?  How do you get to a place where you can finally buy your own home?  How much money do you have to have for a down payment on a house?  What are the steps to buying a home for the first time? Read on for the answers to these questions and more.

3 Steps to Buying a Home for the First Time with No Down Payment

Steps to buying a home for the first time

  1. Do Your Research

Once you determine the area you want to live in, make a list of your most important criteria.  Do you want a short commute to work?  Do you want to live near good schools?  Do you want to be close to restaurants and shopping, or would you prefer to live in a quieter area? 

  1. Trust Your Real Estate Agent

A real estate agent can save you time and money.  Your real estate agent is full of information and will likely already have much knowledge about the area you’re looking in for your first home.  Do your research but also take advantage of the expertise that a real estate agent has to offer.

  1. Understand How to Qualify

Is it true?  Can you really buy a home with no down payment?  It is possible in some circumstances, if you qualify.  You could also qualify for a low down payment, which could also get you on the road to buying your very first home.

Buying a house with no money out of pocket

How to Qualify for a Zero-Down Mortgage

As the name implies, a zero-down mortgage can help you with buying a home with no money down.  How does it work?  You will have to qualify for a loan that is backed by the government.  This type of loan is insured by the federal government if you were to default on the mortgage (i.e., not be able to make your monthly house payments).  This help is sponsored by the government specifically to help people who need financial assistance.  Your home lender understands that this type of loan is less risky and therefore may be more likely to take a chance on approving your loan. 

Two types of this kind of loan that can help you with buying a house with no money out of pocket are:

  1. VA Loan

How do you qualify for a VA loan?  You may qualify if you are a member of the National Guard, an active-duty service member, a veteran, or the widow(er)of a veteran.  The Department of Veterans Affairs back this type of loan.  You can buy a house with no money down with a VA loan if you pay just 2.15% of the value of your loan (it’s just a one-time payment) instead of having to purchase mortgage insurance.  Ideally, you should also have a credit score of not lower than 640.

  1. USDA Loan

How do you qualify for a USDA loan?  The United States Department of Agriculture backs this loan type.  These loans are typically used to encourage people to settle in rural and suburban areas.  When you take advantage of a USDA loan, you get a loan with no money down.  However, there are a few criteria that must be met here, too, for both you and your new home.  Of course, to qualify for this type of loan, the home you are wishing to purchase must be in a rural or suburban area.  

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They have a map of eligible areas that you can look at.  Also, your new home cannot be a working farm.  It has to be a single-family home and it must be your primary residence in which you are going to reside full time.  As well, your combined gross income must not be more than 115% of the average income in the county where your new home is located.  Your debt-to-income ratio cannot be higher than 45 percent and, like the VA loan, your credit score should not be lower than 640.

Buying a home with no money down can be accomplished.  You need to meet certain criteria and if you do, you can purchase a new home with no down payment.  These alternatives are available to help first-time homebuyers.

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