Can You Buy Property in New York With Good Credit and No Money Down?

You work hard for your money. You know you want to own a home soon enough, but getting that down payment will be a downer.

It'd take years to scrape up the thousands you'd need to get that traditional 20% mortgage down payment, right?

Welcome to the new economy. Traditional doesn't work anymore.

As people start to get priced out of old-school mortgages, many are looking for alternatives that can guide them toward home ownership.

People are working at showing their mettle when it comes to money management.

A responsible buyer is what banks really should want. So, it makes sense to use good credit to your advantage.

After all, you should be able to qualify if you have a stable job and a good credit history.

In the past, a fat down payment was a must if you wanted to be a homeowner. Nowadays, it's not necessary.

You're not alone if you've been wondering how to sidestep the down payment. Here are some better options that can still open home ownership for you.

Buying with Good Credit and No Down Payment

• Even though putting a downpayment is still the most popular method of buying an apartment or house, putting no money down is an increasing possibility.
• There are several options for those who have good credit but may have limited funds for a down payment or would instead save money.
• Many types of mortgages today offer close to 0% down, such as FHA loans. However, many lenders offering conventional loans now have their programs, especially for first-time buyers.
• Government-backed loans and programs like VA and USDA loans offer opportunities to buy with 0%.
• Some creative ways to avoid a down payment are swapping properties, different approaches to negotiating with the seller, such as seller financing or rent-to-own, and looking into bridge loans and double mortgages.

Important Considerations For Buying Property

Understanding the types of properties available to you can also help you find options for paying nothing down.

The types of properties you may be able to put nothing or little down on would-be condominiums or townhouses/houses.

Co-ops would be a last option, as many co-op boards have strict regulations on how much should be put down.

Furthermore, the purchasing process involves closing costs besides putting money upfront. Some of the programs mentioned below also can offer assistance with closing costs.

Even if you eliminated your closing costs with your mortgage, you would still need to pay out of pocket for your attorney, title search and insurance, recording fees, and any property taxes you may owe.

Techniques To Shrink Your Down Payment

The best way to get a good lending term out of a mortgage application is to do things still traditionally.

Read more: What You Need to Know Before You Buy Property in NY

So, before you completely write off your down payment plan, consider these options.

FHA Loans

The FHA Loan program is an excellent way to make this happen, and it's a government-backed program designed to help first-time homeowners get their new place.

Most people have FHA loans as their go-to first home loan.

With an FHA loan, you can get your first home loan for only 3.5% down. This makes saving up way more affordable for most people.

They also allow you to use gift money to pay off everything for that down payment.

Accepting an FHA loan is also far more accessible than other options. So, it's worth a try.

There is a caveat, however. An FHA loan may not be a good option for someone buying in New York City who's looking to purchase in a co-op or a condo.

Properties must go through a yearly vetting process to be approved for an FHA loan. Cooperatives and most condo buildings are unwilling to subject themselves to this process.

HUD puts out a FHA-approved condominium list by county and city. The number of buildings is limited, but it may be worth it for you to check out.

Conventional 97 Loans

Conventional 97 loans are another traditional loan that has first-time buyers in mind.

These loans are done with only 3 percent down, all of which can be a gift from a friend or family member.

Ninety-seven loans don't require insurance up front, and PMI cancels after you reach 78% of your Loan-To-Value rate.

Like FHA loans, this loan type was created to make housing more doable for more families. It's an excellent option to look into.

NY government-based programs for first-time buyers

New York City and the State have created programs to make purchasing a home in the city and state a viable option for its residents.

HomeFirst Downpayment Assistance can offer up to $40,000 towards the down payment in New York City based on the applicant's eligibility.

While this might not mean paying zero down, it can mean significantly decreasing the amount you would be responsible for.

The State of NY Mortgage Agency, or SONYMA, offers several programs to ease the cash burden of purchasing a home.

Along with getting a mortgage with low interest rates, SONYMA even offers a down payment assistance program, which allows the applicant to borrow for a down payment.

While the program can lend you up to 3% of the home purchase price, the deal-sweetener is that the loan is forgiven after ten years.

Swap Properties

Let's say you have a house, but you hate it. You want to upgrade your life a little, you know? Swapping the house can be a way to eliminate the need for a down payment.

This is an excellent idea if you are dealing with a seller who wants to downsize their life, move to your location, or get another property.

You also may want to sell your current home to a real estate investor to afford the money down if you still need a down payment.

Seller Financing

Believe it or not, some sellers want their properties gone. Like yesterday.

Whether it's due to tax, problems at home, or just other interests they want to pursue, they will be very flexible regarding your payment plan.

Some might be so ready to sell that they'll even offer to finance it.

Seller financing can be much more flexible, especially if you can use services as a bonus.

Though rare, you may be able to buy a home without a down payment through seller financing if you're good at negotiating.

Rent-to-Own

Rent-to-own properties are getting increasingly common and offer a great "try before you buy" option. This gives you a lease for a home you want for a set amount of time.

At the end of the allotted time, you can buy the house for yourself—often at a discounted rate.

Though contracts can vary wildly, most will set aside a portion of your rent towards a down payment for the home.

You will be responsible for maintenance and repairs during your lease so that it can get pricey.

Even so, it's an excellent way to start home ownership if you know what to look for and read the fine print.

Assume Seller Debt

Many sellers already have debts they want paid off, but they don't want to lose their money doing it.

If you are willing to take out a more significant sum of money, you might be able to lower or get rid of a down payment by being willing to assume their debt at the end of the transaction.

It's a long shot, but it works.

Government-Backed Programs With 0% Down

Specific opportunities allow buyers to get homes for no money given to us by good ol' Uncle Sam. Here are some you might want to take a look at...

USDA Loans

If you're looking to move out of the city or buy a country home for the summer, a USDA loan may be what the doctor ordered.

These loans were designed to revitalize rural areas and get people interested in living in the country.

These loans are offered at 0% money down, but you must live in the country.

Thankfully, a low insurance rate and way lower costs than what you'd find in New York City will be perks to look forward to.

VA Loans

Did you spend time in the military? If so, you never have to worry about buying a home with no money.

VA loans are available for all veterans and can give you a home without paying a single penny. You also don't need insurance on the loan, which can save you thousands per year.

You will have to pay a VA Funding fee of 2%, but that's nothing considering how much you save compared to a typical loan.

Navy Federal Credit Union Financing

Another option for veterans worth looking into is Navy Federal Credit Financing.

Members of this military-based credit union can often get loans that are 100% financed, with no down payment necessary. Like VA Loans, PMI is not required on these loans.

The loan amounts you can qualify for here are also remarkable. Depending on your stats, you might be able to get a jumbo loan for as much as one million dollars. That's not a bad look!

Dollar Homes

This isn't a loan, per se, but it is a federal program that should be on your radar if you want to buy a house with no down payment. Dollar Homes are homes that are priced superbly under market value.

It's in the government's interest to get these homes sold.

They are homes that have not been sold for six months or more on the foreclosure market, as well as homes that were left abandoned by owners.

It would be best to rehab them, but they're so cheap you might not need a loan.

Other Options

When there's a will, there's a way. This is even true if you're looking to buy a home in New York City. Here are some options worth considering if you want to get a mortgage in the Big Apple without any money down.

Gap Loans

Also called "bridges," these are loans you take out to cover a down payment for a home.

You then use the gap loan to pay down the money you need to get approved for a mortgage and buy the home you need.

These are common among real estate investors and nonprofit organizations like NHSNYC's (Neighborhood Housing Services NYC) services. They even have a bureau to help you learn about using them for your mortgage.

They'll even finance up to $65,000 if you have an excellent financial history!

Double Mortgage

If you are strapped for cash, you might be able to get a second mortgage placed on the home.

This is known as Community Seconds and can be accessed through several government and bank-owned properties.

That being said, this isn't always the best choice for you.

Lender and Seller Credits

If a house has been on the market for a very long time, you might be able to get the lender or the seller to pay your down payment for you. This is known as a "lender credit" or a "seller credit."

The money they're paying comes from the closing fees they were supposed to pay. If they are that desperate to make sure they sell the home, they will likely be amenable to it.