How to Buy a House Without Money

Closing on your new home is a wonderful feeling. Unfortunately, the home-buying process is expensive, and most buyers have to save money for a down payment and settlement fees. Rather than wait until you've saved thousands of dollars for mortgage-related expenses (which can take several years), consider practical ways to buy a house without money.

Instructions

1. Order a copy of your credit report and score to learn your credit status. Your personal score determines whether you're eligible to obtain a mortgage loan with no money down.

2. Raise your credit score. Pay your bills on time, reduce credit card debt and pay off collection accounts to improve a low credit score and qualify for the best financing. If possible, obtain a 700+ credit score before applying for a home loan.

3. To get a mortgage loan with no money down, you'll need to receive 100 percent financing from a mortgage lender. Lender guidelines vary, but in most cases, no money down loans are available only to buyers with a good credit history.

4. Ask the seller to pay the closing costs. Settlement fees or closing costs are approximately 6 percent of the sales price. Buyers normally pay this fee at closing. However, if you want to buy a house with no money down, ask the seller to pay this fee. In exchange, be prepared to pay the full asking price for the property.

5. Expect a higher interest rate. Although no money down mortgages are convenient, they generally involve higher interest rates. Higher rates equal higher monthly payments, which can limit your buying power.

Tips & Warnings

• Some mortgage-related and closing-cost fees are unavoidable. These include the credit application fee, title search fee, earnest money, homeowner's insurance, property taxes and appraisal.

Resources

• Annual credit report
• Lending Tree: Compare mortgage loans