Buying Investment Property How to Buy a Home with No Money Down: 6 Different Ways by Hamza Abdul-Samad June 10, 2018June 5, 2018 by Hamza Abdul-Samad June 10, 2018June 5, 2018 Buying an investment property is the most fundamental step when investing in real estate. It is also usually the most difficult part of investing in real estate. This is especially true when financing investment properties is brought into question. Financial constraints are what often hold potential real estate investors back from buying an investment property. However, while it is much easier to purchase income properties with adequate finances, it is very possible to finance a property when you have no money down. There are multiple ways to do this, the most common of which will be explained in this blog. So, without further ado, here’s how to buy a home with no money down in 6 ways. How to Buy a Home with No Money Down: Loan Programs Perhaps the best way for new real estate investors to buy a rental property with no money down is through loan programs. Federally qualified lenders, in particular, are the most common for real estate investors. Examples include loans from the FHA, USDA, and VA. An FHA mortgage is a loan insured by the Federal Housing Administration that targets low-income and low credit real estate investors. USDA loans are similar loans that have a focus on investment properties in rural and suburban areas. If the real estate investor is a veteran, he/she may also be qualified for no down payment with VA loans. Using loan programs answers the question “how to buy a home with no money down” but it might not satisfy the question “how to start a real estate business.” This is because many loan programs have restrictions when it comes to certain rental investment strategies or renting out entirely. Before you commit to a mortgage program, find out what rental restrictions (if any) will apply. To learn more about the best investment strategies in real estate, read this: “Top Six Real Estate Investment Strategies”! How to Buy a Home with No Money Down: Private Money Loan Private money loans are another form of mortgage that allows a real estate investor to purchase a property with no down payment. These loans are given out by private money lenders who may be family members, friends, or private investors and companies. The loan terms are agreed upon by the two parties, making it very possible for a real estate investor to buy an income property with no down payment. The downside of private money lenders is that they demand an interest rate higher than conventional lenders. Still, if you are investing in the best real estate investments, you should be able to pay the private money lenders back on time. How to Buy a Home with No Money Down: Hard Money Loan Loans from private money lenders have a relatively fair risk. Loans from hard money lenders, however, are much riskier. Hard money lenders often require higher interest rates and fees. Nonetheless, many would argue the payoff is worth it since hard money loans can cover the entire purchase. Hard money lenders focus on a property’s value rather than an investor’s financial qualifications. Loans and mortgages are the most common forms of financing when buying an investment property. Paying with cash is another common method. To learn the differences between the two, read this: “Buying an Investment Property: Cash or Mortgage?” How to Buy a Home with No Money Down: Purchase-Money Mortgage Sticking with loans, the next method on how to buy a home with no money down is through a purchase-money mortgage, also known as seller or owner financing. Financing investment properties typically involves a real estate investor securing a mortgage to buy a rental property from a lender who is not selling the property. With seller financing, however, the seller of the property provides the buyer (real estate investor) with a loan to purchase the property. The benefit for the investor in this deal is obvious. The investor can obtain financing from the seller and can very likely pay no money down. The benefit for the seller is similar to that of a hard money lender; the interest rates and fees are much higher than typical loans. How to Buy a Home with No Money Down: Real Estate Partnerships Networking with other investors often yields to the high rental income and the best real estate investments. It can also act as a great opportunity to buy a rental property with no money down. The parties in agreement come up with the terms, which make it possible for an investor to have no down payment. In return, however, that investor will likely be expected to pay high interest rates and fees. Real estate networking platforms are some of the most valuable when investing in real estate. Another vital tool for real estate investing are tools that conduct an investment property analysis. Where can you find such tools? With Mashvisor, of course! To learn more about Mashvisor’s investment property analysis capabilities, read this: “Investment Analysis Software: Real Estate Investing”! To get yourself started with Mashvisor, click here for a 14-day free trial! How to Buy a Home with No Money Down: Lease with Option to Buy The final answer when asking “how to buy a home with no money down” is to have a lease with the option to purchase. Also known as a rent to own, this is an agreement between a landlord and tenant in which the tenant aims to fully purchase the rental property after a certain period of time. With an increased rent to cover the purchase, the tenant (investor) pays the landlord (seller) for the property’s purchase. This method is not very easy to find, but it is very helpful when wanting to purchase an income property with no money down. To Sum It Up There are many answers to “how to buy a home with no money down.” While many are different, the majority involve loans with high interest rates and fees. Before you secure one of these financing methods, though, you should find yourself an investment property. To do just that, click here to start your Mashvisor trial! Start Your Investment Property Search! START FREE TRIAL Start Your Investment Property Search! START FREE TRIAL 0 FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-Samad Hamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. 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