"I want to buy a house but I do not have any money." I hear this all the time from home buyers. Even today, in the tough real estate and mortgage environment of 2008, there are options for little money down to perhaps even no money out of pocket to purchase a home.
The FHA mortgage loan program allows you to buy a home with very little money down. But wait...
FHA home loan programs, allow a buyer to put just 3% down, but this money can come from a gift from a relative. It can also come in the form of a gift from a non profit organization such as AmeriDream and Nehemiah.
To learn more about how to qualify for an FHA loan please read: How Do I Qualify for an FHA home loan? One key qualification your debt to income ratio. You are allowed up to a 43 percent debt to income ratio. You may qualify for higher if your underwriter approves it.
When I first heard of this loan program in the beginning of my career, my first thought as a loan officer was, "this is incredible, I can get more folks into better loan programs!" I have not stopped using the program since.
"I cannot buy a house right now, I don’t have anything in my savings account." Well, if you pay your rent every month, then you are already making a housing payment. You have to live somewhere. Your landlord is not setting up a savings account for you with part of your rent payment. You might as well start building up some equity by owning your own home. You will also get a nice tax write off of interest at tax time. Your rent can’t do that for you.
The problem with trying to save up enough money to buy a home is that most of us can’t save money fast enough to out pace inflation. It is tough to get ahead. The longer it takes the more that house you fell in love with will cost to buy in the future. As Mark Twain once said, "Don't wait to buy real estate, buy real estate then wait."
Where do I get the closing cost money from? Your closing cost money can come from the seller. A savvy real estate agent will know how to negotiate a purchase contract that will cover your closing costs. In a down market, a seller who is motivated to sell their property probably will not even blink about covering this for you. An agent that has been around a while will know how to do this. You are allowed by the FHA lending rules to receive a maximum of 6% seller contribution. This is more than enough to cover all the costs and even buy your interest rate some. Oh yes, you can use the extra money to make your interest rate go even lower than the prevailing rate of interest. How sweet is that? Your friends will think you are a genius and will probably want to do what you did.
Are there special houses that offer this type of benefit? No, any property that is listed in the MLS could be a candidate for the six percent seller contribution. A for sale by owner, FSBO, may also be a candidate. It’s just a matter of good negotiating Again you must have an agent that knows how negotiate this to receive it. It wont be advertised anywhere. Luckily you read this article and know that it is there the taking. I hope by reading this article will help your dream come true of home ownership.
Get more information on the Steps To Buying a Home
Article by Dale Stouffer. Dale has been a mortgage broker since 1996 and has a Masters degree in Urban Planning. This Article is designed to be of general interest and should not be considered legal advice. The specific information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
