No Down Payment or Low Down Payment

Imagine this, you and your spouse find the perfect house for your little family. Its a few minutes from your work place, near a good school, and located in a good community. Unfortunately, though you can pay for the monthly mortgage payments, you just don’t have enough cash on hand to pay for the requisite 20% down payment. What should you do?

Do you scrounge around until you can raise enough to cover the down payment cost? Do you let it go? Or do you try to find a way to get the house without having to shell out a large sum of cash as down payment? If you really want the house, and feel that you and your partner make a good enough living to pay the mortgage - then go for the latter option.

Today, there are financial institutions (both private and government funded) who can help you purchase a home even if you don’t have enough to cover the initial down payment requirement. These lenders can shoulder 95% – 100% of the total property cost (meaning, you either give 5% down payment or none at all) - a sweet deal for the financially capable yet cash-strapped (at the moment) home buyer.

Alas, this wonderful opportunity does come with a price. If you avail of this program, you should expect to be given higher interest rates on your mortgage, make bigger monthly payments, and you may also be asked to purchase what is called a: “private mortgage insurance”. It is a stiff deal, but if you don’t want to spend your life saving just for the down payment, and miss out on the once-in-a-lifetime opportunity to own a reasonably priced home at an upscale market then this option is worth considering.

If you really don’t want to be tied down to their terms and conditions, you can still purchase the house of your dreams: you just need to come up with the requested down payment amount another way. You can borrow money from your relatives, or cash in on some of your investments. If, however, all else fails, you may just have to let go of the property. Don’t feel too bad though. There are other houses up on the market. If you look hard enough, you may find one that fits your personal requirements, as well as your finances to a t. Just be patient, and one day, you’ll find it.