Want to know how to buy a home with no money down? This is not an unusual question – most people consider buying a home for the first time are interested in 100% mortgage financing. While things have changed in terms of getting credit, it’s not impossible to get such a mortgage – hard, but not impossible.
So what’s the key to getting a no money down mortgage loan? Good credit is the key now. In fact, if you don’t have good credit, your chances of 100% mortgage home financing are slim indeed. The housing market crash and bad economy have scared lenders into not giving out easy mortgages.
However, if you have good credit, you stand a pretty good chance of a no money down home. However, don’t think that good credit will be enough. A lender will want to verify you can afford the mortgage. Remember, no money down homes always come with a catch – good credit or not – higher interest rates. If you are interested in getting a house with no money down, realize that you are going to pay higher loan rate than if you put a down payment on the home. Over the course of your mortgage term, this can add up the thousands of dollars. Mortgage lenders want to ensure that you can actually afford these higher payments. You are going to have to show a record of stable employment and your income will have to easily cover the mortgage loan. The 1/3 rule applies here – your mortgage payments should only be 1/3 of your income at most. If your mortgage payments are higher, your application stands a good chance of getting rejected.
If you find yourself getting rejected for homes with no money down, you are going to have to take a careful look at your credit history to see what’s going on. You should, before even approaching a lender, get a copy of your credit report. Your potential lenders will be looking at it and so should you. If your credit score is good then your rejection may be because your income can’t cover the cost of the mortgage. Or maybe you have some recent bankruptcy or foreclosure (within 2 years) that is keeping you from getting the mortgage.
If your score is not good or your income can’t cover the mortgage, then you need to spend a year or so improving your credit and saving up a down payment for the home. Yes, it’s not a no money down situation then, but you will ensure you can indeed get a mortgage.
If you are trying to get a no money down mortgage when you have bad credit, you are going to find it very difficult. Your best bet is to fix up your credit before applying. You may be able to find non traditional lenders online willing to offer you a high interest bad credit loan. You can search for these online.
How to buy a home with no money down? The best way is through as stable job and good credit history. If you don’t have these, your chances are slim.
