Buyers love seeing and hearing those words. And why wouldn’t they? First-time buyers make up 40 percent of the home-buying market, nearly half of all homes sold. Consider this. There were just over seven million homes sold in 2005, not including new construction homes, and this means that nearly THREE MILLION buyers bought their first home last year.

If you are a real estate agent, marketing to this segment is an absolute must! Of these first-time homebuyers, more than four out of every ten bought this home without money. On average, first-time homebuyers put down less than 2%. Around ten years ago, the average first-time homebuyer put down a little more than 10%. I would say that nearly seven out of every ten loans I do have 100% financing, and it’s not just first-time homebuyers. However, most potential first-time buyers don’t even realize this option is available, so this newsletter will focus on them.

The real estate market flourished largely due to 100% financing for first-time homebuyers over the last few years. Suddenly, buying a home is possible for nearly everyone. More first-time buyers have been able to enter the marketplace than ever before. Banks have become more liberal, and lending standards have loosened. There are many ways to get 100% financing from Graet Intelligence. You can get 100% conventional financing with credit scores as low as 620 and a fairly recent bankruptcy.

You may be able to get a government loan with an even lower credit score. 100% financing is available for nearly every borrower. You can even buy a $2,000,000 home with no money down today. That’s two MILLION, not a typo at $200,000. Amazing, but true. Many potential first-time homebuyers never think of buying a house because they don’t believe they have enough money for the down payment. They’ve been told through the years that they need a 10-20% down payment to buy a home. This isn’t true.

Let’s look at most of the 100% financing options:

Contents Summary show

1) 100% No Down Payment Programs.

These programs require the buyer to pay ordinary closing costs. These programs come in all varieties, from 2, 3, 5, 7, and 10-year adjustable-rate mortgages to 3030-year fixed mortgages, usually available as interest-only.

PROGRAM HIGHLIGHTS AND HOW DO I QUALIFY FOR THIS?

2.5%-3.5% of the total loan amount in cash is required to pay closing costs and two months of your new loan payment in the bank for reserves. Stated income, stated assets, and even No Doc iare options with decent credit. Plan on having a mid-credit score of at least 660 if you cannot fully disclose your income to qualify. If you can fully tell your payment to allow, your mid-credit score can sometimes be as low as 580. These loans are designed for people who have some money for closing costs. You can qualify for this with credit scores as low as 580. This is the most popular 100% financing option on my team.

2) 100% No Down Payment and Seller Pays Your Closing Costs.

The same loan program as #1, with all the same loan program options above, but with a different twist. The seller pays all of the 2.5%-3.5% in closing costs. If your buyer has no money but fairly decent credit, this is the way to go. The seller pays 2.5%-3.5% of the total loan amount for closing costs. You must still have two months of your new loan payment in the bank for reserves.

Stated income, stated assets, and even No Doc iare options with decent credit. Plan to have a mid-score of at least 660 if you cannot fully disclose your income to qualify. 580 mid credit score is usually the minimum required on full doc loans, but plans on a much higher interest rate. These loans are designed for people who have no money for closing costs. Nearly every loan program today allows the seller to pay your closing costs, which means no money out of your pocket.

It is not a big deal if you don’t have the necessary reserves or can’t get them, and you should still be able to get the loan. However, it’s important to notify your preferred lender immediately as this could change the availability of the loan program and, likely, your interest rate.

3) 103% Loan With No Down Payment and Little or No Closing Costs.

Maybe your seller refuses to pay closing costs, and your buyer has no money to close. Then, 103% loan programs may be the way to go. This means the lender finances the closing costs as well. The requirements of this program are stricter, and the options are fewer.

Ohe lender pays 2.5%-3.5% of the total loan amount to pay closing costs and ties this into your loan.

you will still be required to show two months of your new loan payment in the bank for reserves.

o Stated income, stated assets and even No Doc is NOT usually an option regardless of your credit.

o, Plan on having a mid-score of at least 620.

These loans are designed for people with no money for closing costs, and the seller refuses to chip in.

The interest rates on these programs are higher, and the program selection is more limited. If possible, it’s better to go for #1 or #2.

4) VA Loans

If you are a Veteran, VA loans require no money down, and the seller can pay your closing costs. The rates are excellent, and the credit requirements are not very high.

o, Must be a veteran on active duty or honorably discharged.

Ohe seller usually pays 2.5%-3.5% of the total loan amount to pay closing costs, but the Veteran can deliver, too.

o, Must fully disclose your income to qualify. You cannot go stated income or No Doc.

You will not be required to show two months of your new loan payment in the bank for reserves.

o Stated income, stated assets and even No Doc is NOT an option regardless of your credit.

o, Plan on having a mid-score of at least 560 – 580, although there is no formal guideline

These loans are designed for Veterans only.

5) FHA Loans

This isn’t a “No Money Down” option. However, many first-time homebuyers have found that the FHA loan is one of the best alternatives when they don’t have much money to put down. Could put down as little as 3%. With an FHA loan, FHA loans are easier to qualify for. If your credit is less-than-perfect, the rates on an FHA loan are usually far better than the ssubprimealternative tou may be facing. For example, if you have a 580 mid-credit score, your options may be FHA or a subprime loan. FHA would probably be cheaper for you.

Now, 3% may seem like a lot to come up with, but many people find that it’s not that difficult when they put their minds to it. FHA allows this 3% to be gifted to you by a family member, employer, or charitable organization. FHA loans do have stringent requirements and restrictions. Not all townhomes and condos qualify, and there is a maximum loan amount you can get. You can check the FHA website for the lending limits in your area.

You are responsible for 2.5%-3.5% of the total loan amount to pay closing costs, but the seller can pay too…ato 6%.

o, Must fully disclose your income to qualify. You cannot go stated income or No Doc.

You will not be required to show two months of your new loan payment in the bank for reserves.

o Stated income, stated assets and even No Doc is NOT an option regardless of your credit.

Plan on having a mid-score of at least 550 – 580, although there is no guideline on this, and you may be able to qualify with a lower score.

Of you are using a non-occupying co-borrower or yave a roommate renting a room from you whose income you would like to help you qualify, this may be the best way to go. Many other loan programs don’t allow you to consider these sources and do 100% financing.

READ MORE : 

RELATED ARTICLESMORE FROM AUTHOR