Drumming up money for a down payment on a home can feel like a lost cause: After you’ve shelled out money for rent, gas, groceries, and other expenses, you might have little or nothing left over. Which may have you fantasizing: Is there some secret out there, somewhere, that could show you how to buy a home with no money down?
Believe it or not, it’s not just a pipe dream.
First, some background: Home buyers who apply for a mortgage are typically advised to put down at least 20% of the price of the home. With the national median home price hovering around $240,900, that ends up being $48,180. Ouch! Yet an overwhelming 69% of Americans have less than $1,000 in savings, according to a recent survey by GOBankingRates.com. To these people, buying a home may seem woefully out of reach.
But the good news is that there are absolutely legitimate ways to put down much less, or even nothing at all. Here are some options to consider.
In an effort to fill underpopulated areas of the U.S., the U.S. Department of Agriculture’s Rural Development office provides mortgages with down payments as low as 0%. The catch? These loans are offered only in towns with populations of 10,000 or less. Still, 10,000 is quite sizable for most towns, so 97% of the U.S. is covered. So don’t write it off until you check whether the area you’re eyeing (or something nearby) qualifies at USDA.gov.
USDA loans also go to those who qualify as having low or moderate income. But there’s a whole lot of wiggle room in the words “moderate income,” too. In areas near San Francisco (yes, USDA loans are offered there), an individual making $141,000 is considered “moderate income.”
Credit unions—nonprofit banking cooperatives—often offer mortgages to members requiring a low or no down payment. To qualify, you’ll typically need to have a good credit score and earn less than 80% of the area’s median income, but those requirements can really run the gamut.Case in point: Recently, the San Francisco Federal Credit Union offered 100% financing on homes worth up to $2 million to borrowers whose incomes could be as high as $219,000 per year.
The U.S. Department of Veterans Affairs’ loan program, which began with the creation of the GI Bill of 1944, gives active or retired military—or a veteran’s surviving spouse—the opportunity to purchase a home with no money down.
VA loans also offer attractive interest rates, because they’re not based on a borrower’s credit score, says Katie Miller, vice president of mortgage lending at Navy Federal Credit Union. Given these perks, a VA loan is often your best mortgage option--if you qualify.
“Requirements are fairly stringent,” says Miller. VA lenders are typically looking for a credit score of 620, and every VA purchase loan requires a special appraisal, which includes the valuation of the property and a close check of the home’s condition. Consequently, some homes are not eligible, although plenty are—it just means you may have to choose wisely.
Speaking of credit unions and the military, the Navy Federal Credit Union offers 100% financing (read: no money down) to qualified members. Eligibility is restricted to members of the Department of Defense and Coast Guard active-duty, civilian, and contractor personnel and their families. As you might have noticed, a Navy Federal mortgage is almost identical to a VA loan; the main difference is that Navy loans have slightly higher interest rates.
Down Payment Assistance
Depending on your credit score and income, you could qualify for one of over 2,200 down-payment assistance programs nationwide, which help out home buyers with low-interest loans, grants, and tax credits. As Jonathan Smoke, chief economist of realtor.com®, explained, “Consumers do not know about these programs, and those that do assume it’s more difficult to get than it is.”
Granted, you may still need some money for a down payment, but much less than you’d think: Home buyers who use down-payment assistance programs save an average of $5,965 upfront at the down payment stage, and $11,801 in monthly house payments over the life of the loan.
To find down-payment assistance programs, you can search by checking your state on the Department of Housing and Urban Development website or using Bank of America’s recently launched database of local programs.
Bottom line: No one should write off their dreams of homeownership purely because they can’t fathom coming up with a down payment. There’s always hope, so don’t write your options off until you check into them. Who knows? You might end up pleasantly surprised.
Just another weekend? Not if you take advantage with one or more of these 5 great projects you can easily pull off for under $300.
Most of the cost of these DIY weekend projects is in the materials. The labor — that’s you — is free. All you need now are the hours. But, hey, you’ve got two full days — plenty of time to be a superhero weekend warrior and grab some R&R.
Project #1: Add a garden arbor entry.
The setup: Install an eye-catching portal to your garden with a freestanding arbor. It’ll look great at the end of a garden path or framing a grassy area between planting beds.
Specs and cost: Garden arbors can be priced up to thousands of dollars, but you can find nice-looking kits in redwood, cedar, and vinyl at your local home improvement or garden center for $200-$300. Typical sizes are about 7 feet high and 3-4 feet wide. You’ll have to assemble the kit yourself.
Tools: Screwdriver; cordless drill/driver; hammer; tape measure. Kits come pre-cut and pre-drilled for easy assembly, and usually include screws. If fasteners aren’t included, check the materials list before you leave the store.
Time: 3-5 hours
Project #2: Install a window awning.
The setup: Summer is super, but too much sunlight from south- and west-facing windows can heat up your interiors and make your AC work overtime. Beat that heat and save energy by using an awning to stop harsh sunlight before it enters your house.
Specs and cost: Residential awnings come in many sizes and colors. Some are plastic or aluminum, but most are made with weatherproof fabrics. They’re engineered for wind resistance, and some are retractable. A 4-foot-wide awning with a 2.5-foot projection is $150-$250.
Tools: Cordless drill/driver; adjustable wrench; tape measure; level. You can install an awning on any siding surface, but you’ll need a hammer drill to drill holes in brick. To prevent leaks, fill any drilled holes with silicone sealant before you install screws and bolts.
Time: 3-4 hours
Project # 3: Screen off your air conditioner from view.
The setup: Air conditioning is great, but air conditioner condensers are ugly. Up your curb appeal quotient by hiding your AC condenser or heat pump unit with a simple screen.
Specs and costs: An AC screen is typically 3-sided, about 40 inches high, and freestanding — you’ll want to be able to move it easily when it comes time to service your HVAC. For about $100, you can make a screen yourself using weather-resistant cedar or pressure-treated wood to build 3 frames, and filling each frame with plastic or pressure-treated lattice.
Or, buy pre-made fencing panels. A 38-by-38-inch plastic fencing panel is about $50.
Tools: Hammer; saw; cordless drill/driver; measuring tape; galvanized wood screws.
Time: Build it yourself in 4-6 hours. Install pre-made fencing in 1-2 hours.
Project # 4: Add garage storage.
The setup: Shopping for garage storage solutions is definitely a kid-in-the-candy-store experience. There are so many cool shelves, hooks, and hangers available that you’ll need to prioritize your needs. Take stock of long-handled landscape tools, bikes, paint supplies, ladders, and odd ducks, such as that kayak. Measure your available space so you’ll have a rough idea of where everything goes.
Specs and cost: Set your under-$300 budget, grab a cart, and get shopping. Many storage systems are made to be hung on drywall, but hooks and heavy items should be fastened directly to studs. Use a stud finder ($20) to locate solid framing.
If your garage is unfinished, add strips of wood horizontally across studs so you’ll have something to fasten your storage goodies to. An 8-foot-long 2-by-4 is about $2.50.
Tools: Cordless drill/driver; hammer; level; measuring tape; screws and nails.
Time: This is a simple project, but not a fast one. Figure 6-10 hours to get everything where you want it, plus shopping. But, oh the fun in putting everything in its place!
Project #5: Edging your garden.
The setup: Edging is a great way to define your planting beds, corral garden mulch, and to separate your lawn from your garden or patio.
Specs and cost: Wood and metal edging looks like tiny fencing; they’re 4-6 inches high. Some include spikes that hold the edging in position; other types must be partially buried. Cost is $1-$5 per foot.
Plastic edging can be molded and colored to mimic brick, wood, and stone. About $20 for 10 feet.
Concrete edging blocks are smooth, or textured to resemble stone. $15-$25 for 10 feet.
Real stone edging is installed flush with the surrounding grade in a shallow trench on a bed of sand, so digging is required. Stone is sold by the ton and prices vary by region. You’ll need about one-third of a ton of flagstone to make an 8-inch-wide edging 50 feet long, costing $150-$200.
Tools: Shovel; wheelbarrow; tin snips (for cutting plastic edging); work gloves.
Time: Pre-made edging will take 2-3 hours for 50 feet; stone will take 6-10 hours.