So you want to buy a house. But you don’t have much money for a down payment. Here are the basics for a no or low down payment and 4 steps to help you.

Basics #1 – typical down payment options: 3% 3.5% 5% 10% 20%+

Basic #2 – no down payment loans …
– VA loans have no down payment up to $776,000
– USDA loan have no down payment but your household income cannot be above a certain amount and the home needs to be rural or not be in a city. The income amounts vary by county and the number of people living in the household. For example a family of 4 can make up to $112,000 per year and still qualify.
– Down Payment Assistance loans – We can get you a down payment assistance loan, the interest rate is around 7.4% (around 2% higher) and the down payment assistance is “forgiven” as long as you stay in the house for 5-7 years. So this is good for those who have decent income but not much in savings.

 Basic #3 – You will need around $1000 for credit report ($75 – $140ish) and appraisal ($750 – 900ish). You can get this back when the loan closes by putting a seller credit into the sales contract.

Basic #4 – Earnest money – You will also need around 1% of the sales price of the home for earnest money. This is needed for the seller to accept the contract. You can also get this back when the loan closes. 

Step 1 – Planning – Start with planning and put some time in your schedule to do some serious planning. You do not want to impluse buy a home or not complete your plans before going to step 2. If you are married you need to do this with your spouse. If you cannot calmly discuss difficult issues with your spouse, then you need to backup and work on this issue before proceeding. Trust me, you have relationship problems if you cannot work together and you will only make things worse if one of you plows ahead. Now that we are past that … Consider location, schools, size, features. Write down a list of NEEDS and a list of WANTS. Calculate your max monthly payment ( I will not go above this amount, never, ever) and the max available for down payment and closing costs (I will not go above this amount, never, ever). Write down what you decided. You are ready for step 2.

Step 2 – Find some reliable experts. You need a mortgage loan officer, realtor, and insurance agent. If you already have an expert, use them. If you don’t, ask your friends or family for 1 or 2 referrals. Each of these experts can refer you to the other expert types. Look online. Get two or three of each. Once you have some names, phone number, and emails, you can go to step 3.

Step 3 – Learn the basics. Tell your two or three loan officers your basic details:
– your middle credit score is ____ (typical range is 500 – 830)
– approximate cost of house (you are guessing at this point, but approximate)
– max cash to closing
– max monthly payment (this includes property taxes and home insurance and principle and interest)
– VA benefits
– your income and list of monthly debts
– any special situation like upcoming bonus, debt collection, bankruptcy, pending divorce, etc
The loan officer should be able to tell you your max house price range
Request an estimate so you understand loan fees

Tell your two to three realtors your basic details: (don’t start looking at houses until you have determined the realtor you are the most comfortable with)
– location to look
– approximate max price of house (from loan officer)
– down payment amount
– loan amount you qualify for ( from loan officer)
request some possible homes available that fit your description

Step 4 – Decide your loan officer and realtor based on information provided, cost, availability, and comfort level.

Your are ready to buy a house. The process can have several bumps along the way. Homes that do poorly at inspection time or loan costs that are unexpected or homes that get sold to someone else.