How to Buy a Home With No Money Down
Gather the basic requirements for a Federal Housing Authority (FHA) Loan., Contact an FHA-approved lender., Seek a pre-approved mortgage., Complete a Uniform Residential Loan Application., Seek an underwriting and document review., Receive loan...
Step-by-Step Guide
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Step 1: Gather the basic requirements for a Federal Housing Authority (FHA) Loan.
Before applying for an FHA-insured home loan, you must gather all of the documents that you will need in order to submit an application.
You will need the following information:
Proof and address of your place of residence for the previous two years.
Social Security numbers of those applying for the loan.
Employment history, including the name and address of your employer for the previous two years.
Proof of income, including your gross monthly salary, W-2 forms, pay stubs, and tax returns for the previous two years.
Information regarding all checking and savings accounts.
Information regarding any real estate that you own.
Loan history, if applicable.
If you are a veteran, have your Certificate of Eligibility and DD-214.
Approximate value of your personal property.
A recent credit report.
An official appraisal of the property that you want to purchase. -
Step 2: Contact an FHA-approved lender.
The FHA does not loan money directly to potential home owners.
Rather, it has a list of approved lenders that make loans through FHA-insurance programs.After gathering all of the required loan information, your next step is to contact an FHA-approved lender and discuss potential mortgage terms.
You can find a list of FHA-approved lenders here: http://www.hud.gov/ll/code/llslcrit.cfm.
Discuss the ways that you can purchase a home for little to no money down.
The lender should be able to tell you the amount that you can finance through a mortgage.
Technically, the FHA does not offer a no-money down loan.
However, you can get a loan with a down-payment as low as
3.5% of the purchase price of the home and lenders are restricted in the amount of fees that they can charge you.If you qualify for an FHA-insured mortgage, you can determine whether you also qualify for down payment support from your state or other lenders (discussed below).
If you qualify, you can purchase a house without having to put any money down. , While you are not required to seek pre-approval, the FHA recommends that you take this step in order to find out early in the process whether you will qualify for a mortgage and how much the lender is willing to let you borrow.
You should discuss a pre-approved mortgage with the FHA-approved lender and ask them about what steps you must take., This application starts the mortgage approval process.
You may be asked to complete this form if you seek pre-approval but you will be required to complete the form during the mortgage process and usually after you have identified a house that you want to purchase.
You will need to provide much of the information that you already gathered such as employer information, income sources and amounts, debts, housing expenses, and the appraisal of the new property, if you identified a home to purchase.You can view a sample loan application here: https://www.fanniemae.com/content/practice_case/do-du-case-6-1003.pdf , Once you have completed your paperwork, chosen a home to purchase and had the home appraised, you submit all of your documents for review.
The lender will examine your paperwork and determine whether your information supports making a loan that they believe will be repaid.
During the process, you may be asked to give a more detailed explanation of certain aspects of your income, expenses or debt.
This is a fairly routine request and often only requires a short letter of explanation that responds to the lender’s questions.
If the lender finds serious concerns about your ability to pay for the loan, you may not qualify for mortgage through this FHA program.
If your loan makes it through the underwriting process, there is a good chance your loan will be approved., If the underwriter believes that you meet all of the lender’s guidelines and the FHA’s guidelines, you will be approved for financing of your home, also known as a mortgage.
If your offer or bid on a home has been accepted, you can move towards closing on your new home., If you are unable to afford the
3.5% down payment on your home, you can seek down payment assistance through state programs, sometimes referred to as secondary financing assistance.
You can locate agencies or nonprofits that offer secondary financing assistance in the following places:
You can find links to state-by-state home buying resources here: http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/local.
If you are a Law enforcement officer, pre-Kindergarten through 12th grade teacher, firefighter or emergency medical technician, you may qualify for a reduced home purchase price in areas in need of community revitalization through HUD’s Good Neighbor Next Door Sales Program.
You can find additional information about the program here: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot If you do not qualify for any of the programs, you should consider asking family and friends to loan you money so that you can make the down payment on a new home. -
Step 3: Seek a pre-approved mortgage.
-
Step 4: Complete a Uniform Residential Loan Application.
-
Step 5: Seek an underwriting and document review.
-
Step 6: Receive loan approval.
-
Step 7: Determine whether you qualify for down payment assistance in your state.
Detailed Guide
Before applying for an FHA-insured home loan, you must gather all of the documents that you will need in order to submit an application.
You will need the following information:
Proof and address of your place of residence for the previous two years.
Social Security numbers of those applying for the loan.
Employment history, including the name and address of your employer for the previous two years.
Proof of income, including your gross monthly salary, W-2 forms, pay stubs, and tax returns for the previous two years.
Information regarding all checking and savings accounts.
Information regarding any real estate that you own.
Loan history, if applicable.
If you are a veteran, have your Certificate of Eligibility and DD-214.
Approximate value of your personal property.
A recent credit report.
An official appraisal of the property that you want to purchase.
The FHA does not loan money directly to potential home owners.
Rather, it has a list of approved lenders that make loans through FHA-insurance programs.After gathering all of the required loan information, your next step is to contact an FHA-approved lender and discuss potential mortgage terms.
You can find a list of FHA-approved lenders here: http://www.hud.gov/ll/code/llslcrit.cfm.
Discuss the ways that you can purchase a home for little to no money down.
The lender should be able to tell you the amount that you can finance through a mortgage.
Technically, the FHA does not offer a no-money down loan.
However, you can get a loan with a down-payment as low as
3.5% of the purchase price of the home and lenders are restricted in the amount of fees that they can charge you.If you qualify for an FHA-insured mortgage, you can determine whether you also qualify for down payment support from your state or other lenders (discussed below).
If you qualify, you can purchase a house without having to put any money down. , While you are not required to seek pre-approval, the FHA recommends that you take this step in order to find out early in the process whether you will qualify for a mortgage and how much the lender is willing to let you borrow.
You should discuss a pre-approved mortgage with the FHA-approved lender and ask them about what steps you must take., This application starts the mortgage approval process.
You may be asked to complete this form if you seek pre-approval but you will be required to complete the form during the mortgage process and usually after you have identified a house that you want to purchase.
You will need to provide much of the information that you already gathered such as employer information, income sources and amounts, debts, housing expenses, and the appraisal of the new property, if you identified a home to purchase.You can view a sample loan application here: https://www.fanniemae.com/content/practice_case/do-du-case-6-1003.pdf , Once you have completed your paperwork, chosen a home to purchase and had the home appraised, you submit all of your documents for review.
The lender will examine your paperwork and determine whether your information supports making a loan that they believe will be repaid.
During the process, you may be asked to give a more detailed explanation of certain aspects of your income, expenses or debt.
This is a fairly routine request and often only requires a short letter of explanation that responds to the lender’s questions.
If the lender finds serious concerns about your ability to pay for the loan, you may not qualify for mortgage through this FHA program.
If your loan makes it through the underwriting process, there is a good chance your loan will be approved., If the underwriter believes that you meet all of the lender’s guidelines and the FHA’s guidelines, you will be approved for financing of your home, also known as a mortgage.
If your offer or bid on a home has been accepted, you can move towards closing on your new home., If you are unable to afford the
3.5% down payment on your home, you can seek down payment assistance through state programs, sometimes referred to as secondary financing assistance.
You can locate agencies or nonprofits that offer secondary financing assistance in the following places:
You can find links to state-by-state home buying resources here: http://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/local.
If you are a Law enforcement officer, pre-Kindergarten through 12th grade teacher, firefighter or emergency medical technician, you may qualify for a reduced home purchase price in areas in need of community revitalization through HUD’s Good Neighbor Next Door Sales Program.
You can find additional information about the program here: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot If you do not qualify for any of the programs, you should consider asking family and friends to loan you money so that you can make the down payment on a new home.
About the Author
Ryan Perry
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