Is there anything wrong with buying a home with zero down?  No, there isn't.  Actually, if you were to compare payments on most homes in the first-time homebuyer range, with one scenario someone putting 5% down, and another scenario at zero downpayment, you would find that with today's rates, the payment doesn't change much.

Why?  Because you are stretching that out over a 30 year loan.

So if you have decent credit, buying a home with nothing down is much better than renting, in most cases!

Where people make mistakes is if they think that they can buy a home with zero downpayment, and then sell it a year or two later.  That's going to hurt you.  Not because the home has not gone up a bit in value (in most cases, it HAS), but because you have costs when you sell a home, and it generally takes 3 or 4 years to break even on those.  But if you buy a home with zero down and it's been 4, 5, 6, or more years since you bought it, in most cases you will be just fine.  And the longer you stay in the home, the more equity you will have.

Most first-time homebuyers that my team and I work with end up getting a zero down home loan in one form or another.

But, you say, what about "closing costs"?  I'm sure you've heard the term.  It's a good question.  Typically, when you buy a home, you have two major costs: The downpayment, and the closing costs.  Well, if you get a zero down loan then you don't have to worry about the downpayment; and I can write in the offer for the seller to pay your closing costs.  So you can get into a home for next to nothing.  (For more details on costs, please see this webpage.)

How do you know the seller will pay your closing costs?  You mean, besides the fact that my team and I zealously represent you? :-)  Because it doesn't really matter to the seller if they pay your costs.  All they care about is the bottom line.  For example, let's say you want to buy a home listed at $100,000, and you and I are mind-readers, so we know that they will take $97,000.  And let's say your closing costs are exactly $2500 (a typical amount, depending on your price range).  With me so far?

What you and I would do is write an offer for $99,500, and put in the offer that the seller is to pay $2500 towards the buyer's closing costs.  That leaves the seller with $97,000.

Now, remember this is a very simplistic example, and that we will be negotiating the best price we can for you.  But this hopefully gives you some idea of how this part of the process works.

For specific ways to get a zero downpayment home loan, please visit my First-Time Homebuyer Programs webpage.

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