How to Buy a House With Nothing Down

Buying a home with no down payment was once an easy proposition.
i David Sacks/Lifesize/Getty Images

There was a time when almost anyone could buy a house with no money down. After the housing crisis of the mid-2000s however, things changed. Banks are no longer willing to lend to anyone who is not putting at least a 20 percent stake in the investment themselves. If you haven't got the cash for a down payment, or you would just rather finance the whole buy, there are still ways to get it done.

Step 1

Apply for a standard mortgage that requires a 20 percent down payment. Shop for the best rate possible and secure the loan. Take out a personal mortgage insurance plan against the 80 percent loan to protect it against loss of income or other unforeseen circumstance.

Step 2

Apply for a second loan for the 20 percent required as a down payment. The rates you receive for this second loan may not be as good as the initial one, since banks are not always as keen on lending for this purpose. Since banks no longer loan the full amount for home purchases, breaking it into two parts is a costly but effective way to get the funding you need and stay within the rules.

Step 3

Take out a personal mortgage insurance plan for the 20 percent loan to cover the entire amount in case of your inability to pay on time. Banks are not likely to lend you the 20 percent down payment without a guarantee that it will be paid off. This guarantee comes in the form of the personal mortgage insurance plan.

the nest

×