Dear Monty: I’ve heard stories of people who have successfully bought a home with no money or good credit. Are There Ways To Buy A Home With No Money And Bad Credit?
Monty’s Answer: We’ll assume you have a full-time job. It can be difficult for a person to buy property without money and good credit. A major factor will be why you have bad credit. Often times, there were events beyond the control of the borrower that caused the problem. Here are some places to look for such a person, individuals, or a mortgage loan company. This project can require a tremendous amount of effort on your part. You are selling against the odds. You may have to do the pitch many times before finding a taker for your proposal. Position your request as a business proposal. There are several ways to investigate.
# 1: If you are a veteran, VA loans do not require a down payment. An online search on your computer’s navigation bar reveals mortgage lenders who advertise their specialization in low-credit loans. Having paid back your obligations on time for at least a year in the past can be of great help in finding help.
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# 2: FHA loans require a 3% down payment, lower interest rates, and better debt ratios. Customers can typically have a below average credit score and still qualify for an FHA loan. Not all mortgage lenders give FHA loans. Before closing, the FHA process must meet credit requirements such as repairs, assessments, and more. Some lenders do not want to invest additional time or train lenders to use these loans.
# 3: consider a crowdfunding website. Ask a friend to do this on your behalf. If your circumstances are imperative and justify your position, put together a cash-raise plan to make a down payment. There are many such websites, one of which has a “Basic Needs” section. Housing is a basic need.
No. 4: Find a co-signer with money, good credit, and enough material assets to co-sign with you. Typically this is a close friend, relative, or occasionally an employer. Someone who knows you and believes that you can and will keep your commitment.
# 5: Find a landowner who will sell you their property under a land contract with no down payment. These property owners can be difficult to find. However, I suspect that it is possible to find such a person if you have a credible story and a plan for how you will make the payments. The best place to find these owners is at the local municipal treasury (tax collector). You will have a list of defaulting owners. Another good source is a real estate agent with access to local multiple listing services. You can look for longer-term homes in the market and homes that have been in the market for years.
If you can’t find a solution here, don’t give up. If you take on a part-time job or can secure a higher-paying job through specialist training, you have changed your living conditions. Many lenders will reopen the mortgage window for you in three to five years, possibly sooner.
Richard Montgomery is the author of “House Money – An Inside Secret To Save Thousands When You Buy or Sell a Home”. He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty or on DearMonty.com
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