Can you still buy a home with no money down? Where do I go to find out the truth about no money down loans? Look no further, you’ve found the right place because we’re going to do a deep dive into your options right now!
No Money Down Loans
Hey it’s your favorite local realtor, Eren Millam with Premiere Property Group LLC. I’ve sold hundreds of homes here in Lewis County and the surrounding areas over the last decade and most of my buyer clients have taken advantage of these no money down payments. Not only that but I’m one of those analytical nerds that likes to read fine print so I’m an expert and know way more than I should about these programs.
Zero Down Loan Programs
The two loan types you’re going to be interested in are the USDA Home Loan (yes, the same USDA you’re thinking about) and the FHA Down Payment Assistance Grant. The key thing to remember for EVERY loan, is that there are always two qualification portions. Not only does the buyer have certain qualifying factors, but the specific house also must meet certain qualifications. Another caveat to consider is that you will still have closing costs (unless you can get the seller to pay them) and still other costs that you will incur to close the deal. I might be getting into the weeds here, but we’ll go over some examples later to help simplify this discussion.
USDA No Money Down Home Loan
Let’s take a look at the USDA Home Loan first. Right off the bat, this loan has location qualifiers. You can check the map, but just keep in mind that most of Washington state qualifies. Areas that don’t qualify are typically centered around cities, but ALL of Lewis County qualifies, including Chehalis and Centralia. As you can see here on this map, the cream colored areas are the ones that don’t qualify.
Next, the USDA Home Loan has an income limit. So you have to have enough money to buy a house, but not enough money to buy a really nice house. This income limitation is again, based on where you live, but also how many people are in your household. It can get a bit more complicated than that, but let’s take a look at an average here in Lewis County. A household of 4 can not make more than $106,400. In blue collar Lewis County, most people will qualify for this.
Now that you’ve qualified, the hard part is finding an eligible house. First, this must be your primary residence, not an investment. Second, the house needs to be “move-in ready”. This means you can’t use this loan to purchase a fixer. Some specific requirements are that the roof must be able to certify for at least 5 years, there can be no leaks in the plumbing, and there can be no peeling paint. That last one is a doozy!
There are obviously more things to look out for on the house, but the idea is that it doesn’t need any structural work. If you can get the seller to make these repairs prior to an appraisal, then the house will qualify. In my experience, if a seller knows about it and hasn’t fixed it prior to going on the market, it probably won’t happen. So that’s the USDA Home Loan in a nutshell.
FHA Down Payment Assistance Grant
Now, let’s jump into the FHA Down Payment Assistance Grant Program. We’ll start with the house qualifiers. Essentially, it is identical to the USDA loan. It needs to be structurally sound and move-in ready. This program is a little misleading as a zero down program with the word “grant” in the name because it’s actually a secondary lien on the property that will need to be paid back when you sell the home. It does not have a location qualifier however and you can purchase manufactured homes where you can’t with the USDA loan. (Technically you can, but there is no lender that will do it because it is so complicated). It does have a max purchase amount limit though, making it pretty difficult to use in today’s current market.
Which No Money Down Home Loan Program is Best for You?
Before we get into the examples, I just want to say these are not the only two programs. They are the most popular and widely used in our area. You need to sit down with a lender to find out your purchase power and determine which loan is best for your specific situation. There are so many variables that it can be overwhelming to try to sort it out yourself. If you need a good lender, I just happen to know a few being a realtor and all, I can help you out there.
So let’s say you qualify and the house qualifies for a $360,000 USDA Loan. If you were to take advantage of this program, here’s how the money would look:
|Loan Type||USDA||FHA Down Payment Assistance||Conventional|
|Down Payment||$0||$0||$11,000 – $72,000|
|Loan Balance||$360,000||$360,000||$288,000 – $349,000|
Nothing is Free, But Every Little Bit Helps
Hopefully this paints a good picture of costs associated with purchasing a home. It will still cost you money because the down payment is only one item of the process. However, it is usually the largest chunk and can allow you to enjoy the financial rewards of home ownership versus having to struggle to save enough money when the market is going up more each month than make at your job! The other big chunk, closing costs, you can negotiate with the seller to pay saving you another large chunk of change.
When all is said and done, you truly can purchase a home for less than one month of rent using one of these zero down payment programs. And that’s the truth! If you have any questions about this or anything else real estate related in Washington state, make sure you leave a comment as I answer all those personally.
Again, I’m Eren Millam with Premiere Property Group, and remember, Extraordinary Service delivers Extraordinary Results!
If you’re thinking of buying or selling your home in the west Lewis County area, contact me today! I’d love to hear from you! Eren Millam – Managing Broker Premiere Property Group, LLC WA License No. 26933
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