There are tons of people out there who'd love to purchase a home but don't have much money saved. Often these people believe that they have no shot at buying a home.
There are actually many ways to buy a home with very little money, possibly even with no money! It's very important when trying to purchase a home with very little money down to understand the PROs and CONs of buying a home with little money down.
Below we're going to discuss 3 great tips for buying a home with very little money. If you're looking for some ideas and ways to buy a home without a boatload of money, the following tips will be very helpful!
1.) Local Grant Programs
Depending on where you're looking to purchase a home will depend on the type of local grant programs that are available. It's a sure bet that in your local area there are some fantastic grants available for buyers, especially first timers.
For example, there are some excellent first time home buyer programs in Rochester NY. There are programs for first time home buyers that are available through the City of Rochester, the Federal Home Loan Bank of NY, and SONYMA.
If you're unsure whether there are local grant programs available, consult with a local real estate professional or a local mortgage lender. They'll be able to help you explore all of the local grant programs that might help provide assistance in covering down payment and closing expenses.
2.) Low/No Down Payment Mortgages
Many buyers aren't aware that there are some excellent mortgage products that require as little as 0% down. There are also many products that require a buyer to come up with as little as 3.5% down!
Below we're going to discuss a few of the most popular low or no down payment mortgage products to consider when trying to buy a home with very little money!
- FHA Home Loans - FHA, which stands for Federal Housing Administration, is one of the most popular mortgage products for buyers who have very little money saved. The FHA loan allows a buyer to contribute as little as a 3.5% down payment. FHA home loans also offer some fantastic mortgage interest rates as well. To get more information on FHA home loans, check out this resource on the benefits and drawbacks of FHA mortgages.
- VA Home Loans - Another fantastic mortgage product for buyers with very little money saved is the VA mortgage. VA mortgages offer mortgages that allow a buyer to finance 100%. The VA loan also allows buyers to get assistance with covering the closing costs from a seller. For some additional information on VA loans, check out this awesome resource on which explains 15 VA mortgage facts!
- USDA Home Loans - If you're thinking about buying a rural home and don't have much money saved, the USDA home loan might be the perfect fit! Administered by the United States Department of Agriculture, this mortgage product again allows a buyer to finance 100%! The USDA home loan does have restrictions as to where a home has to be located in order to be eligible. Check out the USDA eligibility tool to find out if the area you're looking to buy a home in is eligible!
3.) Ask For Seller Concessions
Last but certainly not least, another fantastic tip for buying a home with very little money is to consider requesting seller concessions when negotiating for a home.
Seller concessions, which are also referred to as closing cost credits, are a very important real estate term buyers and sellers should be aware of. A seller concession can be simply explained as a monetary contribution from a home seller to the potential buyer that helps cover their closing costs and down payment.
Depending on the type of mortgage product a buyer is obtaining will determine the amount they can receive in closing cost credits. For example, FHA home loans allow a buyer to receive up to 6% of the purchase price.
It's important when buying a home with very little money available that you understand exactly how much you can get in seller concessions. Also, keep in mind that as you're attempting to negotiate for seller concessions that a seller isn't required to agree to providing them.
If a seller is willing to contribute towards a buyers closing costs, they need to understand they may need to offer more than the asking price to help offset the concession they're making.
Final Thoughts
One of the most important thing to keep in mind when attempting to buy a home with very little money is that it CAN be done. Having an experienced real estate professional can make all the difference.
For nearly 7 years, working as a Rochester NY real estate agent, I've helped dozens of home buyers purchase a home with very little money available. Buying a home with very little money definitely takes some creativity but with the proper guidance, again, it CAN be done!
Other Helpful Home Buying Resources
- Helpful Tips On Buying A House via Joe Boylan
- Why Home Buyers Need Representation When Buying A Home via Paul Sian
- Down Payment Assistance For First Time Home Buyers via Local Realty Service
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