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How To Buy a House with No Money Down, and No Money for Closing Costs

If you are a U.S. Veteran and can get a Certificate of Eligibility from the Veterans Association, I have good news for you!

The VA Loan requires no down payment, and the seller can pay all your closing costs.

Or, the seller can pay part of your closing costs and the lender can give you a credit to cover part of your closing costs.

The only cash you'll need is a deposit for earnest money to show the sellers you are earnest or serious about buying their house (this can be refunded later if all your closing costs are covered by seller/lender) and about $400 for the appraisal report.

Show Me How It Works

Let's say the seller is asking $200,000 for their house. In today's market, a buyer might offer $190,000. Instead of doing that, you offer the seller full price and ask him to pay all your closing costs, up to $10,000. For the seller, either way puts the same amount of cash in his pocket.

Or another strategy is to offer $210,000 (ten grand above asking price) and then ask for a $10,000 contribution. The slightly higher loan amount won't make much difference in your payment, and you get to spare yourself from coming up with the extra cash to close.

If the seller will contribute enough for only part of your closing costs, you can opt to take an interest rate higher than par rate (the lowest daily rate) and let the lender give you a credit for the other fees and/or prepaid expenses.

I'd Rather Have a Lower Price and Lower Rate

If you have the money to cover your own closing costs, then take the lower purchase price (and lower interest rate) instead.

Choose Your Favorite Lender

You can work with any mortgage broker or mortgage lender that is licensed to do VA loans in your state. How do you avoid the greedy loan sharks and work with an honest, ethical mortgage professional who is worthy of a Veteran's business? That's a great question, and one you need to take very seriously. I'm ashamed to say some loan officers don't mind over-charging a U.S. Veteran in order to pocket more commission for themselves. It's like they have a seared conscience.

For the best up-to-date, insider advice, I recommend picking up a copy of Homebuyers Beware: Who's Ripping You Off Now? Order online at or Barnes & Noble, or stop by your local bookseller.

How Do I Get a Certificate of Eligibility?

You can apply for a Certificate by submitting a completed VA Form 26-1880. For faster service, include proof of service with your request.

If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any tine lost.

If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge from Active Duty should be included with your VA Form 26-1880.

If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included.

Important: Send a photocopy of DD214 only. Keep your original document.

Six Additional Benefits of a VA Loan:

  1. Low 30-year fixed rates
  2. VA loans have fewer closing cost fees
  3. No prepayment penalty
  4. No monthly mortgage insurance (MI) fee
  5. The mortgage is assumable (subject to VA approval of the assumer's credit), making it easier to sell in the future.
  6. VA performs personal loan servicing and offers financial counseling to help veterans avoid foreclosure should financial difficulties arise.

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