How to Buy A Home With No Money Down in the US/CA/the UK?

Can you really buy a home in US, CA or the UK with no money down? Of course, Yes. But there are certain terms and conditions that you need to meet in order to become eligible for this. And these terms and conditions vary from country to country. Now, what if you don’t qualify to buy a home with no money down, in any of the aforementioned English-Speaking countries of North America and Europe.

Well, there are some other ways around this. And that include making efforts in your personal capacity to use other people’s money by offering them a good deal, in return.

So, in this article, we will talk about all the public, private and personal options that you have to buy a home with no money down in the United States and Canada of North America and the United Kingdom of Europe.

The outline of our article would be like this – the First United States, next Canada, and then the United Kingdom.

The last segment of this article will cover different personal options that you can consider to buy a home with no money down as well as a little money down in all three aforesaid countries so that you can at least qualify for a mortgage that requires less down payment than the conventional ones.

So, let’s begin with the United States, first.

How to buy a home with no money down in the United States?  

The home ownership in the US has fallen to a generational low, thanks to the lack of first-time buyers. And, those who are planning to buy a home in the US for the first time don’t have any enough money in their savings accounts to pay the down payment required to qualify for a mortgage after paying for the rent,  groceries, commute and other expenses.

Another big reason behind the lack of first time home buyers in the US is that a majority of population believe that they need to pay 20% of their mortgage as the down payment but this is a myth. The truth is that the United States not only have many public and private programs offering no money down mortgages for the first time home buyers but also many legitimate ways to put down as less as 3% of the mortgage. Here are your options when it comes to buying a home with no money down in The United States (US).

If you need more great and/or detailed information about purchasing a home in the United States I suggest getting this book HERE

For another great resource for American buyers only click HERE

The USDA Zero-Down Payment Mortgage Program 

In an effort to help the rural development, The United States Department of  Agriculture has created a zero-down payment mortgage program for the low-to-moderate income families of the country. And the MIP (Mortgage Insurance Premium) of this program is much than any other of no money down mortgage available in the country.

The MIP of the USDA Loan is just 0.35% and this quite low compared to 0.85% for the loans offered by the Federal Housing Administration (FHA). The Mortgage Insurance Premium is added to your monthly payment.

Wait! Are you thinking that the rural area is all about farms and un-development land? Stop thinking about it because the USDA property eligibility map shows the most areas outside the major cities are considered a rural area.

To check your eligibility for a USDA Loan, visit its official website: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

If you wanna know all about mortgages, check this great book HERE

For my Canadian friends, this one is is more tailored towards mortgages in Canada

100% Home Loan Financing Offer of The US Department of Veterans Affairs

For veterans, the Home Loan offered by the US Department of Veterans Affairs is the best way to buy a home in the US with money down, thanks to its 100% financing offer for the eligible veterans. The best thing about the VA home loans is that they don’t require any mortgage insurance, so you can save thousands of dollars a year. However, they require you to pay the one-time VA Funding Fee, which is 2.15% of the loan amount. This one-time VA Funding Fee is charged in order to help the program be self-sufficient.

The credit scores required for a VA Home Loan vary from lender to lender. While most of the lender will require a 600+ credit score, some small lenders can also accept lower credit scores. To obtain 100% Home Loan Financing from the US Department of Veteran Affairs, you need to obtain a  VA Certificate of Eligibility. For more information about VA Home Loans, visit the official website US Department of Veterans Affairs: https://www.benefits.va.gov/homeloans/index.asp

If you wanna learn more about improving your credit score read THIS

100% Home Loan Financing Offer of Navy Federal Credit Union

The Navy Federal Credit Union offers 100% Home Loan Financing to its members, providing they are the first-time home buyers. The credit union don’t charge any Private Mortgage Insurance (PMI) and offers no money down mortgage programs for conforming and super jumbo loans.

The maximum loan limit for conforming loans is typical $424,100, though the loan limit can vary by state and county. Jumbo loans are Jumbo financing available up to $1 million. To know more about the 100% Home Loan Financing Offer of Navy Federal Credit Union, visit its official website: https://www.navyfederal.org/products-services/loans/mortgage/100-percent-financing.php

What is the Next Best Option if you don’t qualify for a no money down mortgage in the United States?

In case, you don’t qualify for any of the available no money down mortgages in the US, the FHA Loans & Conventional 97% LTV Mortgage come to your rescue, I have covered those methods in detail as well as you can find the rest of the article for first time US home buyers over HERE

More Resources for United States home buyers only:

Good Mortgage America: Factors in Buying a Home with Confidence: Team, Attitude & Approach

Buying America the Right Way: What overseas real estate investors need to know to get it right when buying in America

 

So these are some options to buy a home with little or no money down in the United States. Now, let’s move to no money down mortgage options in another English-Speaking country of North America – Canada.

How to buy a home with no money down in Canada?  

Is it really possible to buy a home with no money down in Canada? Unfortunately, the answer is ‘No’.

The zero-down payment mortgages programs no longer exist in Canada. As of September 2012, people require paying at least 5% down payment of their total home loan amount.

So, is there any way around this? Luckily, The answer is ‘Yes’. There are many ways to help you raise money for your minimum down payment.

RRSP Withdrawal

If you have been saving for your retirement, then you can use the Home Buyers’ Plan to withdraw up to $25,000 from your personal RRSP, and another $25,000 from a spouse (under certain conditions) without having to pay taxes.

 

Gifted Down Payment

If you are a first-time home buyer with no money down, you can use the gifted down payment option to raise the money for your down payment. The gifted down payment is basically a gift from your friend, family member, or a company, who is willing to pay the down payment on your home loan as a gift.

To use the gifted down payment as the down payment for you home loan, you need to the concerned person or authority to sign a Gift Letter that specifies that they are gifting you the money so that you can pay the down payment of your home loan and that amount doesn’t have to be repaid.

After getting that gift letter signed from the concerned person or authority, you need to provide your lender the snapshot of the gifted funds being transferred into your bank account – preferably within two weeks of your closing date.

It is worth mentioning that you still need to have enough money for your closing costs from your own savings, which generally range from 1% to 1.5% of your total cost of your home.

Borrow the Down Payment

If none of your friends, family or a company is willing to gift you the down payment for you home loan, you can approach those lenders in Canada, who allow you to borrow your down payment for your home loan. To borrow the downpayment from other sources provided you have an excellent credit rating and income.

The sources which you can use to borrow your down payment includes a line of credit, personal loan, credit card, friends, family members or a company. While you can raise a major part of your down payment for your home loan this way, you are highly recommended to save this option for the last. Also, before going for this option, you must be aware of the fact that borrowing the entire amount of your down payment can put you into serious financial trouble in future, if you can’t manage to pay the borrowed down payment or your home loan monthly payment on time, whatever the reason.

So please speak to a professional financial advisor before considering this option to finance the down payment on your home loan.

To keep things short on the main page I go over the rest of the methods in the Canadian dedicated article here on Lead Smart Homes over at How to buy a house with no money down in Canada

Also, all I am giving you here is brief information, if you want more details you can get more by clicking HERE

How to Buy a home with no money down in the UK?

Is it possible to buy a home with no money down in the UK? Yes, but only on the condition that you meet the all the eligibility criteria of a 100% LTV (Loan to Value) or No Deposit Mortgages. But the bad news is that such mortgages are very rare these days. And those which are available requires a guarantor, who is usually your family member, who owns his/her own home to be named on the mortgage too. This can put his/her own property or savings at risk if you fail to make your repayments on time.

 

For example, the Barclays Family Springboard Mortgage offers a 100% LTV Mortgage or No Deposit Mortgage if you are buying your first home or moving house. But it requires a guarantor, who has to put 10% of the purchase price into a savings account with Barclays. Say, if you bought a house for £150,000, your guarantor would need to put £15,000 into the savings account. Your guarantor will get this amount back with interest added after three years as long as you keep up with your mortgage payments. But if you fail to make repayments of your mortgage on time, they will recover the pending amount form the savings of your guarantor.

What if you don’t have any guarantor?

If you don’t have any guarantor to qualify for a 100% LTV (Loan to Value) or No Deposit Mortgage in the UK, you are left with the only option of first saving the minimum amount of money that you may need to pay for the down payment for your mortgage and then start looking for those mortgage options in the UK, which requires the lowest down payment.

Is there any other way to buy a home with no money down in the UK?

Yes, apart from the 100% LTV (Loan to Value) or No Deposit Mortgages, there is another way to buy a home with no money down in the UK. And the way is – Using Other People’s Money. Keep in mind that it’s going to be somebody’s money. Somebody’s money is going down, if not yours. Also, you need to be smart enough to get money from other people to buy a home with no money down in the UK. Here are some tips to help you get the money from other people to buy a house in the UK with no money down.

Find the people in your personal contacts who are looking to invest their money and offer them a lucrative deal that they can’t resist. Make sure that you approach as many people you could and collect small amounts from everyone, say, 1000 pounds from each person, and offer them a good deal. You need to use your brain to find out what kind of deal you are going to offer that’s worth their investment and risk that they are taking on you. So, who would you go to first – your mom, dad, uncle, aunt, brother, sister, colleague, boss?

You can also approach investors of your locality or a real estate investment club because these are the people who don’t have time to look for a lucrative deal but they are actually looking to invest a good amount into something that is worth their money and the risk involved. These investors can easily invest 10,000, 20,000, and even 50,000 pounds if you are smart enough to convince them to invest their money into your deal or offer.   You might have got family members, friends, colleagues or relatives who have invested a part of their savings into shares, debentures, fixed deposits, mutual funds, and other investment schemes. But they are not satisfied with the returns on their investment (ROI).

 

Hate to sound like a broken record but again, to keep the front page as short possible, the rest of the article on buying a house with no money down in the UK is over on the United Kingdom tab or by clicking How to Buy a home with no money down in the UK

> With that being said this is still just a brief overview, there are still many great methods out there that you can use, if you are looking for reading material on this subject here’s some of my favourite material:

The 106 Common Mistakes Homebuyers Make (and How to Avoid Them)

Home Buying For Dummies

Buying a Home: Don’t Let Them Make a Monkey Out of You!: 2017 Edition

Home Inspection Checklists: 111 Illustrated Checklists and Worksheets You Need before Buying a Home

Not One Dollar More! How to Save $3,000 to $30,000 Buying Your Next Home: Completely New 2018 Edition (available Nov 2017)