SoFi

A blanket mortgage is a special type of real estate financing that can be helpful when someone wants to buy multiple properties at once. Developers, investors, and house flippers may find blanket loans beneficial.

Here’s more about how they work and their pros and cons.

What Is a Blanket Mortgage?

A blanket loan is a single mortgage loan that uses more than one piece of residential or commercial real estate as collateral.

The borrower can sell one of the properties while keeping the rest under the loan. Then the mortgagor can sell a second property, a third one, and so forth while still keeping the financing intact for the loan’s entire term.

You may be able to negotiate a blanket mortgage that lets you buy, sell, or substitute properties with minimal angst.

Recommended: Investment Property Guide: How to Get Started Investing in Real Estate

How Does a Blanket Mortgage Work?

A developer, for example, may find a large lot to subdivide into smaller ones, creating a new housing subdivision, under a blanket loan financing structure.

As general contractors or families buy the individual lot or lots they want to build on, those lots could be released from the developer’s blanket mortgage, with unsold lots remaining under the blanket loan.

As another example, someone who buys fixer-uppers, renovates them, and sells them for a profit may buy several properties of interest and finance them with a blanket mortgage. Each property that is refurbished and sold can be released from the blanket mortgage loan.

If a blanket mortgage comes with a release clause, the proceeds from a property the borrower sells can be used to buy another property.

Lenders can create their own terms, so it’s important to be clear about a loan’s parameters. They will want to know about each of the properties involved, their intended use, where they’re located, and their condition. If a housing development is being planned, the lender will want proof of the borrower’s experience.

Recommended: How to Buy a Multifamily Property With No Money Down

Pros and Cons of a Blanket Mortgage

Each of the different types of mortgages comes with pros and cons. That’s true of a blanket mortgage, too.

Pros	Cons
The borrower needs to close on just one loan, which can save them money on closing costs.	Lenders will require anywhere from 25% to 50% down.
Only one credit approval is involved, and fewer monthly payments need to be made.	The borrower may need to have significant assets and excellent credit to qualify.
Developers, investors, and the like can expand their portfolios in ways that can circumvent any limit on the number of mortgages that one borrower can take out.	If the blanket mortgage is set up as a balloon loan, a large amount may be owed when the term ends.
The interest rate may be more attractive than separate loan rates, which can lead to lower monthly payments (and contribute to better cash flow).	If the borrower defaults on one property, the lender may attempt to foreclose on all properties covered by the mortgage.
If the loan is set up with a balloon structure, payments may be low during a predetermined time frame, perhaps interest only.

Recommended: SoFi’s Mortgage Help Center: Resources for Home Buyers and Real Estate Investors

Should You Consider a Blanket Mortgage?

Possibly. If you’re qualified and you want to buy multiple properties with one mortgage, selling them and releasing them from the loan as they are individually sold, then a blanket loan may make sense.

Blanket mortgages can be elusive. If a blanket loan seems like a good choice, you can inquire about one with banks that offer commercial loans or talk to a mortgage broker.

Any lender or broker you contact should be able to answer your mortgage questions.

The Takeaway

Blanket mortgages are a specialty type of loan used by developers, real estate investors, and house flippers when they want to put multiple properties under a single loan. Blanket loans have pros and cons. Qualifying for one isn’t for the faint of heart.

If you’re looking for a more typical mortgage for your home, second home, or investment property, you can explore mortgages and perks from SoFi. A blanket statement: SoFi wants to help borrowers every step of the way.

Start with a quick rate quote.

FAQ

What is an example of a blanket mortgage?

If someone wants to buy fixer-upper homes to rehab and resell, they may use a blanket loan to purchase several of them at once. As a home gets refurbished and sold, that property is released from the blanket loan while the other properties are still funded.

Is it hard to get a blanket mortgage?

Lenders will typically want a borrower to have sizable assets and excellent credit, and the down payment can range from 25% to 50%. So blanket loans are limited to more established borrowers with solid financials.

Who would most likely obtain a blanket mortgage?

Businesses may apply for a blanket loan to buy commercial property. Landlords, both commercial and residential, may also benefit from this type of loan. So can construction companies and people who flip homes.

Is a blanket loan a good idea?

Under certain circumstances, a blanket loan can be a useful form of financing. When purchasing multiple properties with one loan, just one approval is needed. Closing costs may be lower. Interest rates and payments may be more attractive, too. That said, requirements to qualify for this type of loan can be significant, with down payments ranging from 25% to 50%.

---

Photo credit: iStock/oatawa

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0222020

Read more

Once you’ve found a home to buy, it’s natural to want to close the deal quickly. As of mid-2022, the average closing time was 48 days after acceptance of an offer, down slightly from 51 the year before.

All-online mortgage options make lending faster, and borrowers are enthusiastic about an online mortgage process, ICE Mortgage Technology has found. Most home sales can be buttoned up in 20 to 30 days. Still, delays can happen.

Here’s what you need to know in order to belly up to the remote or real closing table.

How Long Does Closing on a House Take?

If you’re paying cash for a house, you’ll typically be able to close quickly.

But let’s assume a mortgage will be part of the process. You’ve jumped through the initial hoops of the mortgage loan process, including making an offer on a home you like.

If accepted, you’ll provide an earnest money deposit and sign a purchase contract. The price and any contingencies — conditions that must be met for the deal to proceed — are included in the purchase agreement.

This begins the due diligence period. It includes a title search to verify ownership and look for any liens that need to be paid off to ensure clear title to the new home. Most but not all issues will be reflected in a preliminary title report.

A typical contingency period is 30 to 60 days, though something like the inspection could be required within 10 days or less. Buyers can ask for extensions in writing.

Here are four common contingencies:

Financing Contingency

The mortgage contingency nullifies the deal if you can’t procure a mortgage within a certain time. The contingency language may be specific about the type of loan, down payment, and interest rate.

Getting pre-approved for a mortgage is standard, but it’s not a guarantee. After your chosen home is under contract, your mortgage still has to go through underwriting.

Recommended: How Does the Mortgage Pre-Approval Process Work?

Home Sale Contingency

You need to sell your current house to complete the purchase. You’ll typically be given 30 to 60 days to do so. In a competitive market, many sellers won’t even consider the offer with a home sale contingency.

But some sellers may employ a kick-out clause, which allows them to keep showing their home and “kick out” the contingent buyers if the sellers receive an offer without a home sale contingency.

Appraisal Contingency

An appraisal is usually required when a home is being financed. If the property valuation is less than your offer, you may walk away from the deal. You could also cough up the difference or ask the sellers to lower the price.

How long after the appraisal to close? About two weeks.

By the way, you can put an offer on a house that’s contingent.

Home Inspection Contingency

A home inspection is generally not mandatory for any loan type but will help ensure that the home is free of issues that may result in expensive repairs. In a seller’s market, many properties are sold as is, meaning sellers won’t negotiate for repairs after the inspection.

In a buyer’s market, sellers might agree to pay for some repairs and also slightly reduce the home’s price.

How a Mortgage Closing Works

You’ve qualified for a mortgage and chosen a lender.

After you’ve supplied income, asset, and other documentation, all of the contingencies have been satisfied, and your mortgage has received final approval from underwriting, it’s time to prepare for closing.

This will be the big day, when signing the closing documents legally transfers ownership from the sellers.

Sign Documents

Three days before your closing date, your lender will provide you with a closing disclosure that outlines the final closing costs and terms of your home loan. You can compare this five-page form with the loan estimate you received after applying for the mortgage.

Paperwork (lots of it) will have been prepared for you, including the deed of trust or mortgage and the settlement statement.

In some cases, everyone gathers in one place to sign closing paperwork. Other times, buyers sign separately from sellers. And more and more states are allowing remote online notarization or a hybrid.

Pay Closing Costs

The lender will usually tell you the amount needed for closing several days before the event. A wire transfer may be arranged a day or two before closing. Or you can present a cashier’s check or certified check that day.

Cash to close includes closing costs (unless you opted for a no closing cost mortgage) and your down payment minus your earnest money deposit and any seller credits.

Transfer the Home Title

After signing a mountain of documents, the closing attorney, escrow officer, or title company representative will record the house deed, and you will be given the house keys.

Recommended: First-Time Home Buying Guide

The House Closing Process, Step By Step

Here are the basics.

1.    Seller signs the purchase agreement.

2.    Buyer may order a home inspection.

3.    Buyer applies for the mortgage (and considers asking to lock in the rate).

4.    Lender orders a home appraisal and conducts credit underwriting.

5.    Mortgage is approved.

6.    Buyer provides proof of homeowners and title insurance.

7.    Buyer receives the closing disclosure; notice of closing time, date and location; and what to present at closing, like a photo ID and cashier’s check or proof of wire transfer for cash to close.

8.    Buyer takes a final walk-through, verifying that sellers have made any required repairs and that nothing in the purchase agreement was removed. The buyer can check for leaks, turn on heating and air conditioning, and so forth.

What Causes Delays When Closing on a House?

A buyer and seller agree to a target closing date in the purchase contract, but the closing doesn’t always happen on or before that date.

Financing, appraisal, inspection, and other issues can delay a closing. Here’s a taste of what may cause a postponement:

Lender wants more documentation. Even if buyers were pre-approved, received their mortgage commitment, and were cleared to close, lenders will review credit and bank statements one last time within a few days of closing. Any abnormalities can delay the closing.

The mortgage is denied. Even after pre-approval, a home loan may be denied for lots of reasons, sending buyers back to the starting block.

Interest rates surge unexpectedly. This can affect qualification if the loan is not locked.

The appraisal comes in low. A home may appraise for less than the purchase offer. Buyers can request a second appraisal, ask the sellers to renegotiate the price, put more down, pay the difference, or walk away if they have an appraisal contingency.

The inspection reveals that major repairs are needed. If it’s an as-is sale, buyers can walk away if they had an inspection contingency in the contract. They could still try asking the sellers to make certain repairs, request a decrease in the sale price based on the cost of repairs, or ask for a home warranty.

The title is not clear. A contractor’s lien, for example, can cause a closing delay if the contractor can’t be found to settle it.

Buyers can’t sell their house in time. If sellers agreed to a home sale contingency, the clock is ticking. If the buyers’ home doesn’t sell in time, the deal could fall through.

Instrument survey issues. Boundary line encroachments or disputes can hang up a closing.

Unrealistic closing date. Any complication can cause a deadline to fail. An extension must be approved by each party.

The Takeaway: Closing Day Preparation Pays Off

How long does it take to close on a house? The average closing takes place 48 days from the time an offer is accepted, but the timeline varies. Getting to the closing table, in person or remotely, is an accomplishment. It means you qualified and persevered.

If you’re shopping for a mortgage, it pays to get pre-qualified and pre-approved.

SoFi offers low fixed rate mortgages and low down payments. If you’re in the market for a primary home, investment property, conforming loan, jumbo loan, refinance, or home equity loan, see what SoFi can do for you.

---

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0722008

Read more

Not counting the reams of time you probably will spend ogling homes and yard-shaming virtually and IRL, it could take as little as a month to make an offer on a house and close if you’re financing the purchase.

Here’s the scoop on how long it takes to buy a house and get the keys in your hand.

How Long Does It Take to Buy a House In 2022?

Once you’ve homed in on a home you love, the mortgage process — from application to closing — may take an average of 30 to 60 days.

So yes, a life-changing event can happen within a month or two.

But closing times vary. A cash buyer might be able to close on a house within days. An applicant with an iffy credit history and income may need 90 days or longer.

Before You Start Looking for Your Next Home

It’s a good idea to get your head in the game before the hunt begins.

Organize Your Finances

If you’re asking yourself “How much of a mortgage can I afford?” you can get an estimate easily.

A home affordability calculator will give you a feel for a home price limit and monthly payments. Getting pre-qualified will also give you a quick ballpark estimate.

Getting a down payment together to buy a house in many parts of the country isn’t as hard as many people think. The average down payment on a house is less than 20% (though putting less than 20% down on a conventional loan usually triggers mortgage insurance).

Conventional loans may call for just 3% down; FHA loans, as little as 3.5% down; and VA and USDA loans, nothing down. (With government loans, mortgage insurance or fees come along for the ride.)

Low- and moderate-income borrowers can sometimes get down payment assistance through a state or local agency.

Figure Out Where You Want to Live

You might know exactly what neighborhood, school zone, and vibe you want. Then your search can zero in on that area.

But looking at the cost of living by state can be eye-opening.

And narrowing things down, you might want to check out market trends by city and neighborhood.

Determine Your Must-Haves

Do you want to buy a house that has been completely updated, or will a dowdy abode or fixer-upper do? The cost of any renovations or repairs must be factored in, of course, and may be funded with a home improvement loan.

If only new construction will do, that can mean a tract home, spec home, or custom home.

What size range can you live with? Maybe you need more space, or maybe you’re financially downsizing.

Is a low-maintenance condo or townhouse more your style, or do you need a single-family home with room for a swimming pool or garden?

Five Steps to Buy a House

Ready? This timeline assumes you’re about to start seriously shopping for a house.

Step 1: Get Mortgage Pre-approval (Minutes to Days)

Unlike pre-qualification, mortgage pre-approval means one or more lenders have vetted your finances, usually with a hard credit inquiry. Once your offer on a home is accepted, if your chosen lender is one of these, it has a big head start on your final approval.

An online application might take about 20 minutes to complete if you have all of the documentation in hand, including two years of W-2s and/or 1099s, two years of tax returns, recent pay stubs, a list of fixed debts, and two months’ worth of account statements.

Lenders will look at your credit scores and credit history.

They will look at income, debts (including student loans), assets, proof of employment, rental history, divorce, bankruptcy, and gift funds for a down payment.

Depending on the lender, pre-approval could be nearly instantaneous or it could take days.

If you’re shopping for a mortgage, know that multiple credit inquiries by lenders are counted as a single inquiry for 14 days and sometimes more.

What Is a Pre-approval Letter?

A pre-approval letter from a lender states that you’ve been tentatively approved to borrow up to a specific amount. It lets sellers know that you are likely to be able to get financing. The letter will have an expiration date of 30 to 90 days.

What Is a Verified Approval Letter?

This is the term used by some lenders for a pre-approval letter, to make clear the difference between pre-qualification and pre-approval. A hard credit inquiry will have been performed, and an underwriter will have examined your pre-approval application and additional documents.

Step 2: Make an Offer on a House (a Day to a Few Days)

Once you find a house you want to call your own, it might take up to five days to make an offer and come to an agreement with the seller on price and contingencies. A closing date will be in the purchase agreement.

Usually when you make an offer, you will provide an earnest money deposit to the escrow company.

Step 3: Secure the Mortgage (30 to 60 Days on Average)

Now you can make a full mortgage application with as many lenders as you wish, and not just lenders that pre-approved you.

It’s smart to look at more than rates — one of the different types of mortgage loans might be a better fit than the others.

You’ll need to choose a mortgage term as well. Thirty years is the most common.

Once you apply, you will receive official loan estimates, allowing you to compare mortgage APRs and more. Choose a lender. Check at the top of Page 1 of the loan estimate to see whether your rate is locked, and until when.

Step 4: Prepare for Closing

Appraisal and Title Search

Your lender will order an appraisal of the home. A property valuation that comes back lower than the purchase price could hinder loan approval.

The appraisal may be performed from 14 to 45 days before closing.

A title search of the property also will be ordered, resulting in a preliminary title report.

Underwriting

This is mostly a waiting period for the buyer. Credit reports are ordered, and the application information is verified.

Mortgage underwriting focuses on the three C’s:

•   Capacity (will your income and debt load allow you to make the mortgage payments each month?)

•   Credit

•   Collateral (did the appraisal show that the home price and value are aligned?)

Your mortgage loan officer may come back to you with questions. Once you receive final loan approval, a mortgage contingency can be lifted.

Home Inspection

A home inspection is optional but widely recommended.

Closing Disclosure and Cash to Close

Your lender is required to send you a closing disclosure at least three business days before the closing. It should match your loan estimate or come close.

You’ll need to send a wire transfer for cash to close one to two business days before closing. The closing disclosure will tell you how much money you need to wire.

Cash to close is closing costs (unless you chose a no closing cost mortgage) plus your down payment minus your earnest money deposit and any seller credits.

An option: Prepare to take a certified check or cashier’s check to the closing table.

Final Walk-Through

Your real estate agent will schedule a final walk-through within 24 hours of closing. This is a chance to be sure the home is in the condition you agreed to under the purchase terms.

Step 5: Close on Your Loan (an Hour or Two)

The lender will send your closing documents to the closing attorney or title company.

You’ll sign a river of documents in person or remotely.

The deed will be recorded with the appropriate county to transfer title to the new owner, you. Then you’ll receive the house keys.

The Takeaway

How long does it take to buy a house? It could take about 30 to 60 days from the time your offer is accepted. That’s a quick close on a new beginning.

Are you ready to buy a house? Time is of the essence. First look into the fixed-rate mortgages SoFi offers with low down payments. Then get a rate quote.

---

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0422002

Read more

Plumbing leak repairs can be a huge drain on your budget. Smaller issues that are caught right away can run just $200, not counting cleanup. But hidden pipe failures that take longer to discover can easily lead to thousands of dollars in water damage.

The best way to keep plumbing repair costs down is to be alert to potential problems and to fix even minor leaks quickly. We’ll discuss different levels of plumbing leaks and the typical cost of cleanup and repairs.

Common Types of Plumbing Problems

Water leaks can happen anywhere in the home — not just the bathroom or kitchen. That’s because plumbing systems can be as complex as a spider’s web. Plumbing leaks can cause damage ranging from the minor to the calamitous, with repair costs to match. Supply chain issues and inflation can drive the cost up even further.

Recommended: How to Pay for Emergency Home Repairs

Smaller Plumbing Leaks

Leaking sinks are the most obvious and least damaging kind of plumbing issue. If you’re lucky, a trickling noise will alert you before the flood waters rise. The leak itself typically can be fixed for $90 to $130.

However, hidden leaks can spread quickly and easily erode your cabinetry. Leaks that occur around the base of your faucet can also damage your countertop. Surface or cabinet repairs can cost $250 to $500 — not including the price of new materials.

Garbage disposals can spring a leak in a number of places. Depending on the scale of the issue, it might be possible to DIY the repair. But if the garbage disposal needs to be replaced, you’ll pay about $250 including parts and labor, according to Home Advisor.

Larger Plumbing Leaks

Leaks behind the walls can go undetected for some time. Contrary to what homeowners like to believe, many leaks don’t cause any change in water pressure or visible wall stains. (Plumbing issues are just one reason why the cost of a home inspection is worth it.)

Leaks stemming from water-using fixtures can also travel through walls to any room in the house. Eventual signs may include a lingering musty smell, mold, and dampness of the surrounding flooring or drywall.

The real doozy with repairing this kind of leak is that you usually have to cut into your wall to fix it, with wall incision and repair amounting to most of the cost. While the actual leak repair will often run to several hundred dollars, when you add in the diagnosis (made after carving into your wall) and wall repair, it can all add up to $1,000.

Water heater leaks can damage the foundation of a house and ruin any property kept in the lowest level of your home. Beyond the damage that the leak itself may cause, the reason for the leak can also prove costly. If your water heater is damaged, often through sediment buildup in the tank, it may need to be replaced. A new water heater can cost around $1,200 for a tank-based unit and labor.

Disaster Plumbing Leaks

Slab leaks are the 1906 Earthquake of plumbing situations. This type of leak occurs when the pipes under the foundation start to leak. Repairs for a slab leak can be costly if you have to remove flooring and jack-hammer through the foundation.

Homeowners should keep an eye out for a decrease in water pressure, warped hardwood floors, warm flooring, and moist patches. Slab leaks can be pricey to diagnose and pricier to fix, costing up to $4,000.

Washer leaks are another common-yet-costly water problem. The water leading to your washing machine is constantly running, so any leaks will continually push water into your walls and flooring and flood your home fast.

To appreciate the total cost of a major basement flood, you’ll want to consider water removal, cleanup, ventilation, and decontamination, as well as any building and structural repairs. There may also be costs associated with the replacement or cleaning of personal property and mechanical equipment. Final price tags vary greatly but can be as much as $15,000.

Fixing the Leak

While there are no guarantees, homeowners can help avert plumbing disasters by staying on top of regular maintenance, being alert to the signs of hidden leaks, and responding rapidly if they suspect a problem. Learn more about the most common home repair costs.

As mentioned above, a gradual decrease in water pressure can indicate a leak or buildup in the pipes. Another red flag is a sudden increase in your water bill.

While minor leaks in accessible areas can be fixed by a competent homeowner, it can pay to call in the pros for an assessment. Get tips for how to find a contractor.

Financing a Plumbing Leak

Homeowners dread plumbing problems due to the widespread damage they can inflict. Caught early, a simple under-the-sink leak can set you back just $200. But major leaks and floods can end up costing many thousands of dollars in professional water removal, cleanup, decontamination and mold remediation, wall and floor restoration, and property replacement. Even experienced DIYers may feel more comfortable having a plumbing pro evaluate the situation and fix it right the first time.

With a SoFi Personal Loan to cover your bills, you can stop worrying about having to cut corners or postpone an important repair. Borrow from $5,000 to $100,000 at a low fixed rate, with no fees required. Our personal loan calculator can show you how much you qualify for.

Compared with high-interest credit cards, a SoFi Personal Loan is simply better debt.

---

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPL0822010

Read more

Even in a hot real estate market, it’s possible to learn how to buy a house with no money down. The trick is, you need to know where to look.

Zero down home loans aren’t available everywhere and to every borrower, but if you do qualify and can find an area with a zero down mortgage, homeownership could be much more attainable.

Here’s exactly what you need to know about how to buy a house with no money down.

Can You Buy a House With No Money Down?

You can buy a house with no money down with certain loan programs in certain areas. There are more homeowner resources to help you buy a home than you may realize.

And first-time homebuyer qualifications can be more flexible than you know. Here’s where to look for and what to expect on a zero down mortgage.

💡 Recommended: Learn more about first-time home buyer programs.

How to Buy a House With No Money

Of all the things you need to buy a house, a down payment holds many buyers back.

But there are a few avenues you can take to buy a home with no money down.

•   Buy a home with a VA or USDA loan, which are no down payment mortgages

•   Receive assistance for your down payment or closing costs from a state or local program or a family member

•   Receive a lender credit

•   Ask for a seller concession

USDA Loan

A USDA loan requires no money down and is intended for buyers in rural areas. There are two ways the U.S. Department of Agriculture loans money:

•   single-family housing direct loans

•   single-family housing guaranteed program

The direct loans are issued by the USDA and come with a 33-year term for low- and very low-income households. (Very low-income applicants may stretch the repayment term to 38 years.)

The guaranteed program is run through approved lenders with a 30-year fixed rate for low- to moderate-income households.

The USDA eligibility site shows eligible areas and income limits.

VA Loan

A loan guaranteed by the U.S. Department of Veterans Affairs is a zero down payment mortgage with low interest rates for qualified veterans, active-duty service members, certain reservists and National Guard members, and surviving spouses of those who died in the line of duty or as a result of a service-related injury. Most borrowers pay a one-time funding fee, which can be rolled into the loan.

Lenders can be more flexible with credit scores, mortgage amounts, and debt-to-income ratios.

💡 What credit score do you need for a VA loan?

Down Payment and Closing Cost Assistance Programs

Many city and state agencies offer different mortgage types and down payment assistance to buyers, especially low- to moderate-income homebuyers, first-time homebuyers, veterans, and people buying in federally targeted areas.

The terms vary. Sometimes the assistance for a down payment is in the form of a second mortgage that is repaid over time. Other terms include deferred payments that are only due if the property is sold, loans that are forgivable if the property is occupied by an owner for a specified amount of time, and even grants.

HUD, the U.S. Department of Housing and Urban Development, steers homebuyers to city, state, and nonprofit programs that offer down payment assistance.

Down Payment Gift From a Family Member

A down payment gift from a family member can also help you buy a house with no money down. The main thing to remember about a down payment gift from a family member is that the money must be properly documented with a gift letter. Your lender will likely provide a template to make sure you have all the crucial elements included.

Lender Credits

Lender credits are what you get when you agree to pay a higher interest rate in return for some money that the lender contributes toward your closing costs. The more lender credits you receive, the higher your rate will be. With some lenders, you can cover your closing costs entirely with lender credits. This is a common practice when refinancing a loan.

Seller Concessions

One strategy real estate agents have used is to ask for a credit from the seller, to be contributed toward the buyer’s closing costs. Making an offer above asking price in tandem with the seller concessions makes this option more palatable for sellers in a competitive housing market.

💡 Need more help? Head to the Home Loan Help Center

The Takeaway

Learning how to buy houses with no money takes some research, but could be well worth your time. With a VA or USDA loan, down payment assistance, gift money, or lender credits, it is possible to obtain a no money down mortgage.

Qualifying first-time buyers can still catch a break with a conventional mortgage loan from SoFi by putting just 3% down.

SoFi offers fixed-rate loans and a team of mortgage loan officers to answer all your mortgage questions.

Get pre-qualified for a home loan in minutes.

FAQ

Can cash gifts be used as a down payment?

Yes, but certain rules must be followed for the gift to be documented by the lender, usually in the form of a gift letter.

Are there any homebuyer grants?

Sometimes. They’re usually reserved for first-time buyers, veterans, or people buying homes in federally targeted areas. You might start a search for assistance with your state housing finance agency or HUD and then look for city and county programs.

What are down payment assistance programs?

Down payment assistance programs help homebuyers afford down payments and sometimes closing costs as well. This is done in the form of grants and loans and can vary by location.

What credit score do I need to buy a house with no money down?

For a zero down mortgage backed by the USDA or VA, lenders are advised to look at a borrower’s situation case by case. Approved USDA loan lenders usually require a minimum credit score of 640, though the department itself doesn’t have a credit score requirement.

Most VA loan lenders will want to see a credit score above 620, but again, the VA does not have a minimum credit score. Applicants may qualify with a score below 620 when debt, income, and the ability to shoulder future mortgage payments are given a close look.

Down payment assistance programs often require a minimum credit score of 620.

---

Photo credit: iStock/Paperkites

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL0222007

Read more