The money/credit quadrant

Assuming your debt-to-income ratio is in line, there's a quadrant I like to use to help illustrate the relationship between your credit score and the money you have saved up.

Consider this when using a conventional or FHA loan.

	No Money	With Money
Good Credit	Could work	Good to go!
Bad Credit	This will be hard	Could Work

VA loans aren't as much of an issue here. But if the application has no money and a low credit score, it will be really difficult to get it through.

What I'm trying to say here is, if you want to buy a house without any money, then get your credit score up.

What does 'no money' actually mean?

When people say “no money,” they usually mean no down payment, but that’s only part of the equation. The two big things you have to cover to buy a home are your down payment and your closing costs.

So if you want to actually walk into a house having brought in close to nothing from your own savings, you need to solve for both of those.

So here’s how it can happen

Loan programs

There are two common loan programs that do not require a down payment: VA and USDA.

If you'd like to check a separate post on USDA loans, click here.

If you'd like to check a separate post on VA loans, click here.

For now I'll do a quick recap:

USDA loan

• $0 down payment required
• Lower rates than conventional loans
• Income limits apply (can't make too much money)
• Tighter restrictions on debt-to-income ratio

Here's a tool to see if you are eligible. https://eligibility.sc.egov.usda.gov/eligibility

This website shows you areas that are eligible. You can also enter your family size and income for eligibility.

If you need help finding a good mortgage broker that can offer a USDA loan, fill out this form and I'll get you connected with a good one.

VA loan

If you're a military veteran, you could be eligible for a VA loan, which requires $0 down payment.

The easiest way to confirm is to request your Certificate of Eligibility (COE), but here’s what usually qualifies.

Service Type	Minimum Service Requirement	Notes
Active Duty (Current or Veteran)	90 continuous days	Still serving or honorably discharged
Veteran (Wartime Service)	90 days active duty	Must be during wartime periods (e.g., Vietnam, Gulf War)
Veteran (Peacetime Service)	181 days active duty	Must be during peacetime periods (e.g., post-Vietnam, pre-Gulf)
National Guard or Reserves (Not Activated)	6 years service	Unless discharged for service-connected disability
National Guard or Reserves (Activated – Title 10)	90 days active duty	Federal active duty (Title 10) required
National Guard (Activated – Title 32)	90 days active duty (30 consecutive)	COVID/disaster response may qualify
Surviving Spouse	Varies (no remarriage before age 57)	Spouse must have died in service or from a service-connected disability

There aren't income limits, loan limits, or even credit score limits. Each lender may be a little different on the credit score limits, but the VA doesn't have a written rule on minimum credit score.

If you need help finding a good mortgage broker that can offer a VA loan, fill out this form and I'll get you connected with a good one.

Down payment assistance

There are down payment assistance programs that are offered in each state. There are also others offered by individual cities and counties.

Here's a guide for starters. It shows all 50 states. Click the state, see the programs.

Some commonalities you'll see is that it is either a loan, or a grant.

A grant will be forgivable after a set period, without monthly payments due.

A loan may or may not have monthly payments. Some are "silent second" loans that are only due once you refinance or sell the property.

Others are true loans that require monthly repayment.

There are nationwide, in-house lender options as well.

If you'd like help finding a good mortgage broker that can offer a nationwide down payment assistance program, fill out this form and I'll get you connected with a good one.

Sometimes down payment assistance programs can also cover closing costs.

Closing costs

You may be able to get away with not paying closing costs depending on a few things.

Here are some ideas on how to get your closing costs paid for.

Get the seller to pay for them

If you are in a buyer's market (few buyers, lots of house inventory) then you'll likely be in a good position to ask the seller to cover your closing costs.

If you combine this option with a $0 down program, you could walk in without owing any money at closing.

If you are in a seller's market, this option is less likely, but not impossible.

If you've found a home that is priced low, here is a strategy.

• List price: $100,000.00
• Likely value: $110,000.00
• Offer $110,000.00 purchase price with $10,000 seller paid closing costs

This way the seller gets the asking amount, and the buyer gets closing costs paid for.

This works as long as the appraiser cooperates. If the appraiser pegs the value at $100,000.00 then you can kiss those seller credits goodbye.

The reason is because the lender will lend up to the value of the home (plus upfront insurance) or the purchase price, whichever is less.

They won't lend $110,00.00 on a property worth $100,000.00, so you'd be stuck paying the difference.

Assistance

Some of the down payment assistance programs in that guide will sometimes cover the minimum down payment, and anything left over will cover closing costs.

This varies program to program.

Get a gift

Do your rich parents spoil you?

Yes?

Then this part is easy.

Real estate agents

Real estate agents can pay toward your closing costs. For some agents, it's a big shot to their ego if you ask for it.

Just like the seller, agents are known as an "interested party" and can contribute to your closing costs.

Interested party contribution limits

Each loan program limits how much an interest party may contribute toward your closing costs.

For FHA it is 6% of the purchase price.

For conventional it is 3% (assuming less than 10% down payment)

For USDA it is 6%

For VA it is 4%

Lender credits

You may be able to trade paying a higher interest rate for a lender credit to offset your closing costs.

Example:

If 6.5% is the market rate, then trying to get a 6.25% would cost "points" known as "buydown costs".

In that same example you could check out what would happen with a 7% interest rate.

It would likely come with an upfront credit to apply toward your closing costs.

You'll pay for it with a higher monthly payment, and that's the trade-off.

Summary

Here's a quick summary of everything you can do to get into a house without paying anything upfront.

• VA lending offers a $0 down option for eligible military veterans
• USDA lending offers a $0 down option for eligible areas with income restrictions
• Down payment assistance programs may cover down payment and closing costs in the form of a loan or a grant
• Interested party contributions are limited, but may be applied toward closing costs
• Lender credits may offset closing costs as a tradeoff for a higher interest rate

And one last thing:

Make sure you’re buying a house you can actually afford. No point in getting in for zero dollars if it’s going to stretch your monthly budget to the breaking point. Budget first, house second.