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.
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.
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.
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.
- If you are active or retired military, you may be eligible for 100 percent guaranteed home loan issued by the Department of Veterans Affairs. The program was designed to assist returning soldiers to settle down and start their lives after tours of duty in World War II. Contact the VA to see whether you qualify.
- Don't give up so easily if you are being met with denials when applying for what amounts to a 100 percent mortgage loan. The Federal Housing Authority subsidizes a selection of home loans that require as little as 3.5 percent down if you qualify.
Robert Morello has an extensive travel, marketing and business background. He graduated with a Bachelor of Arts from Columbia University in 2002 and has worked in travel as a guide, corporate senior marketing and product manager and travel consultant/expert. Morello is a professional writer and adjunct professor of travel and tourism.