Profile picture for staceyq

Are there lenders still out there willing to work with 1st time homebuyers with zero down payment?

Can I get some feedback on what to expect if I could afford the monthly payment of $2000, but don't have money for a down payment? Is it true that I could ask the seller to pay the closing costs? If so, what are the chances having that happen in today's market?
  • June 28 2011 - Stockton
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Answers (22)

Profile picture for Connie Klemme
not knowing your specific market...my answer should be qualified with  some version of talk with someone local.

but...
You can most certainly ask for seller to pay closing costs.  However FHA and conventional loans still need a down payment from you (or from a gift given to you NOT by the seller).  There are some down payment assistance programs and bond money- all of which come with rules and penatlies for not following those rules so as you check into those...find out the rules (read them yourself don't rely on someone to tell them to you), and consider whether or not you want to do that.  Also keep in mind that there are limits based on the loan to the amount you are allowed to ask the seller to contribute for your closing, title and prepaids.  It could very well be that your costs are higher than that amount.  - especially if you're in an area where the taxes and insurance (prepaids) are high.  

talk with a LOCAL lender and ask them about programs in the area.
and...if you can afford $2000 a month...consider finding something to do without (no cable tv, cut back on eating out etc) for a while and save up some cash for your down payment.  It's FAR less stressful when buying if you know you've got some cash in the bank to get started.
  • June 28 2011
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Profile picture for SoCal Engr
If you can afford $2K/month but haven't managed to save anything for a down, you're not ready to buy a house. "Want to" and "ready to" are vastly different.
  • June 28 2011
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There are some lenders that offer a grant for 3% of the purchase price of a home for income qualifying buyers. Although I thoroughly agree with the poster above, here is a link [hot link removed by moderator ] to a lender that can help you with your purchase goals.
  • June 28 2011
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Profile picture for wetdawgs
When one gets to the point of saying "hmm, I'd like to own a house", it is the perfect time to come up with a strategy.   

What are the steps?   The first step is saving up a down payment.   Saving a down payment makes you more attractive to lenders, and also shows that you have the self discipline to save some of the money you earn each month.   As there are far more expenses to ownership of a home than the mortgage (P & I plus insurance), this self discipline will help make your home ownership successful.     You get a bonus if you save up 20% down payment because then you don't have to pay mortgage insurance - something that can add a hefty amount to your monthly payment.

The next step is to start to talk to lenders and get pre-approval.   Then, and only then, start talking to agents.   (A good agent won't show houses if you don't have a pre-approval in hand.)

  • June 29 2011
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Profile picture for Ofe Polack
I think it is time for you to visit a lender and have a talk about your wants and your purchase power and most important to develop a strategy to accomplish your dreams.  If you do not have a downpayment, it may be a bit premature, but by discussing your financial profile with a lender you will be guided as to what to do.  The best of luck!
  • June 29 2011
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Your first step is to contact a lender who is familar with the area in which you intend to purchase.  There are some area of the country that qualify for the USDA loan program with zero down.  You can get some help from the seller for closing cost, but you will still need to come up with some funds at closing.  Working with the right Realtor and lender is important, but you must do your part and start saving now.  Depending on the area where you live that $2000 a month payment may not get you much. Be patient, follow your lender's advise and good luck. While it may take 6-12 months, it will be worth it the to find the right loan and house.

  • June 29 2011
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$2,000 will buy you approx. $250,000 home with the CHF Access half percent down payment purchase loan in CA only requiring a minimum 580 fico score. You can get into the purchase with as little as the half percent down which is $1,250 which can be a gift from family or relative too. There is zero down USDA Rural which is for purchase of homes in rural areas of city limits such as incorporated areas and rural cities and $2,000 will buy you approx. $275,000 as there is no mortgage insurance with that program but requires a minimum 620 fico score. Also if you are a Veteran, there is VA no no which is zero down. The sellers, banks, these days are paying 3% towards the buyers closing costs even though the programs are allowing up to 6% to be paid by the seller and some do pay up to that amount especially if the home needs repairs and been on the market awhile but generally speaking, 3% is the norm so even the programs like the CHF Access half percent down can go towards down payment or closing costs there is still money needed to be brought in by the buyer themselves or by gift unless they get premium financing and use the rebate towards the closing costs, virtually coming in with the half percent down.
  • July 16 2011
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There are also city and county DAP, down payment assistance programs, which contribute down payment and closing costs towards the purchase and some are even silent which you don't make payments on but they share in equity with each city or county program is different. You usually use these types of programs just to get into the home and get your credit scores up and some money saved to refinance into a conventional loan and split the least amount of equity as possible with those programs. If you use the 203K loan to purchase a home that is in need of repairs of $5,000 minimum, that will give you more choices that other buyers are or may not be open to even considering and those banks are more open to paying all of your closing costs which you ultimately finance as they will probably stack those costs onto the loan if there is room in value as the appraisal has to come in at the amount financed. There are many choices but not with the big banks as they only want the cream of the crop which is great credit and large down payments...

  • July 16 2011
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The point which Frank the zero down/ low down pusher keeps missing:

If you haven't saved anything, you aren't ready to own a home. Doesn't matter if you can, you aren't mature enough with your money to be a home owner. Things come up as an owner that are expensive, and if you have never saved any money in your life, how will you suddenly handle them? roof leak, broken air conditioner, special assessments etc. 
  • July 16 2011
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Profile picture for NY Broker
New York deal?  if so - you can buy with 0% down, but only on a VA loan.  If your not a vet, the smallest DP you can have is 3.5% with a FHA loan.
  • July 18 2011
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@Roberto, It is time to buy now any way you can if you can buy a home right now paying less than you are for rent. Also, to rent or lease a home, they want first, last and security deposits. You can buy a home in CA today with zero down USDA Rural and if your a Veteran, half percent down with a minimum 580 fico score. You pay for a home warranty for a year and then pay to renew it annually and if anything breaks in the house you are covered to have it repaired or replaced for only the $50 service fee. There are some things that they only cover a portion such as pools, septic and a few others but most all things are covered. You have NOTHING to Lose and EQUITY TO GAIN! Buy Now while prices are low and sell when they are high and you will do alright...
  • July 20 2011
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Profile picture for wetdawgs
@Frank:  What statistics are you using to support the hypothesis that housing prices have bottomed in the area of the other poster's interest?
  • July 21 2011
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Profile picture for sunnyview
"You have NOTHING to Lose and EQUITY TO GAIN! Buy Now while prices are low and sell when they are high and you will do alright..."

Nice infomercial for puffing up the concept of no risk real estate purchasing nationwide. All I can say is that if you followed your own advice in the last few years that must have made you very rich or very broke. So which one is it? If you're in Victorville, CA, I'm guessing the latter.
  • July 21 2011
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Technically speaking lenders want to see some 'skin in the game' in the form of a downpayment. However, the FHA has some guidelines allowing the Seller to offer 3-6% (check recent guidelines)  of the pruchace price towards closing costs. The net effect of a 3.5% down loan could potentially be close to $0, Check with your mortgage broker or banker about FHA guidelines..
Good Luck!
  • July 21 2011
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"However, the FHA has some guidelines allowing the Seller to offer 3-6% (check recent guidelines)  of the pruchace price towards closing costs. The net effect of a 3.5% down loan could potentially be close to $0, "

That's the stupidest answer I've read in along time. 

The OP said they can afford $2000 per month and nothing else. If they did negotiate a seller credit, that would be for the closing costs since it cannot be used for down payment. Regardless of how much seller credit they get, they need the 3.5%.

Closing costs are closing costs - down payment is down payment.

Please explain this "net effect" 0 down payment FHA loan that you are referring to. I didn't see the word "gift" any where in your answer.

PS, Love the picture of you on the phone, I remember my first cell phone too.
  • July 21 2011
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The CHF Access half percent down payment program is for California only and is an FHA 30 yr fixed loan. Yes, you only need the half percent down out of pocket to close. The seller can contribute up to 6% and you will probably only get 3% and will be short a little which can be paid for in premium financing with paying the shortage with rebate on the clients behalf, leaving the client to close the transaction with only the half percent down requirement which can also be a gift from a relative. Click the picture and read. CHF Access is for all of CA.
*@Sunnyview
If you didn't sell at the top of the market in 2005-2006, then you lost equity every day since then. Of course we all lost money since then. The key is to sell while the market is at the top and don't be greedy. I waited a little to long in the ninety's and lost as well as this time too. My daughter did real well by selling in 2006 and moving out of state. My brother bought in 2005 at $1,595,000 and is letting it go and starting over just like the rest of us that own and the neighbors move in paying 50-75% less than you owe. The market is a mess but if you can get financing and buy now at 50-75% off and pay less than rent, do it. Sell when the value doubles and your probably safe to invest for the next 10 years in purchase.
*@Wetdawgs
I study the home prices within the last 10 years to get an idea of the market value of properties now and compare to renting verses buying. My other half is a Real Estate Broker and helps evaluate value and market conditions. We have sold homes all over southern California.
Each county is evaluated differently as well as each city within. You have to access the local multiple listing service to evaluate comparables...
  • July 21 2011
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Profile picture for sunnyview
"If you didn't sell at the top of the market in 2005-2006, then you lost equity every day since then."

Actually, I did sell pre drop, cashed out my bubble equity and rented for several years. I pleaded with everyone I knew to sell and even begged people I didn't know to sell. At the same time, I cautioned buyers not to buy houses that did not pencil out. The people that listened are happier now. The people that bought with zero down or negative am loans not so happy.

While I don't disagree with you that buying for the same or less than rent provides some protection from the market, I think that most people still need more of a safety net than zero down provides in a dropping market. There are no guarantees in real estate unless you are buying at prices that are prebubble and completely supportable with current rent minus a reasonable vacancy rate and repairs. Most people cannot get that with zero down.
  • July 21 2011
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There are lenders that can help you get a 100 percent financing loan! I know a few. SInce you are in Stockton, you could purchase in Lathrop, Mountain House, parts of Tracy, Patterson or Oakdale and get a USDA loan. Also if you want to stay in Stockton their is a great half .05 percent down program called CHF access that you could use to purchase.There are alot of factors that go into what 2000.00 dollars will buy you per month in this area.Areas like Lathrop have higher taxes,bonds and assesments which means you get less bang for your buck. But I would say safely that you can get about 275k (not taking into consideration debt to income ration factors etc.) Seek out a professional for a pre-approval they can really answer that question to your specific needs.
  • November 08 2011
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Taj is pretty spot on. Although its unlike given the attitude banks have right now, but that is sure to change sooner than later. A USDA loan is likely your best option unless you qualify for something more competitive given your personal history. Regardless, be careful! Buying without any savings puts you at a higher risk initially so be sure to see counsel from a trust-worthy lender!
  • November 10 2011
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Profile picture for meadowcove
It is buyers like you that caused the crash. Stop spending and save up 20%.
  • November 11 2011
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Profile picture for sunnyview
It's not fair to say that buyers with zero down caused the crash. They could not have caused anything if the banks had not handed them 100% financing with no strings.
  • November 11 2011
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To actually answer your question there are banks in my area that will do 0% percent down payments. But you would have to negotiate closing costs with the seller. in most cases you should have any where from 5 to 12k saved for closing cost and down payments. My suggestion would be talk to your local realtor and get a good loan officer to talk you through your options.
  • November 13 2011
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