In 2018, the average selling price of a home was $270,000, and the average amount people put as down payments was $15,490. Based on these figures, the average down payment is roughly 5.37% of a home’s purchase price.
While 5.37% is easier to come up with than 20%, it’s still a lot of money. Some people can’t come up with this much money. In fact, some people don’t have any money to use for a down payment.
The good news is that you can buy a home without putting money down. Most people don’t realize this, and they might never purchase homes because they don’t know that this option exists.
If you have no money to use as a down payment, you can still buy your dream home. The method you can use is a rent to own program. Here is a guide to help you understand what this is and how it works.
Most Loan Programs Require Money Down
When you purchase a home with a loan, you’ll have to meet the lender requirements for the loan program you use. You can choose from several loan programs, but most require money down.
For example, if you buy a house with a conventional loan, the lender might require 20% down. If you buy a house with an FHA loan, the lender might require 3.5% down.
USDA loans offer a way to buy a home with 0% down, which is often the only 0% down option. The downside is that you must qualify for a USDA loan by meeting the eligibility guidelines. If you don’t meet those, you can’t use this loan type.
Instead of using a traditional loan to buy a house, you could look for rent to own homes in Dallas or Plano, TX. In fact, you can find many rent to own homes in other parts of Texas, too, including Arlington and Austin.
Buying a rent to own home provides the ideal way to buy a house if you don’t have money to put down. Therefore, it’s a great option for people who want to buy homes but can’t meet the lender requirements for loan programs.
Rent to Own Programs Rely on Different Standards
To buy a home through a rent to own program, you must meet some standards. The standards needed are typically easier to meet, though than the standards that lenders have.
For example, you might need to agree to a credit check. Lenders always perform these when evaluating loans, so you’ll have to go through this either way.
You might also need to complete an income-verification process, which is also necessary with most loan programs. This process assures the seller that you have the income to use to make the payments.
You won’t have to worry about putting a lot of money down, though. In some cases, buyers will need small down payments. In other situations, buyers will not need any cash down.
You also won’t have to worry if you have bad credit. People with almost any credit score can qualify to buy a house through a rent to own program.
The Basics of How These Programs Work
Now that you know some of the details about rent to own programs, you might be wondering about how this system works. Finding out as much as you can about rent to own homes in Arlington, TX, is helpful before proceeding.
A rent to own program works by allowing you to purchase a house by renting it. You find a home to buy through a rent to own program, and you work out a contract with the seller.
As you shop for a home to buy through rent to own, you can use the same principles that you would if you planned to buy a house with a mortgage. In other words, you can search for the right home for your needs.
Once you find a home to buy, you create a contract with the seller. You agree to pay the seller a monthly mortgage payment that includes principal and interest. You agree on the interest rate and a purchase price when you initiate the deal.
To decide on a price, you might want to get the house appraised. An appraisal will tell you how much the home is worth.
After working out the details and paying your initial payment, you receive the keys to your new home. The home becomes yours, as long as you continue making the payments.
When you reach the end of the contract, you must get a mortgage loan to pay the seller the outstanding balance. The balance will be less than the home’s purchase price because the seller applies part of your payments to the principal balance.
When you get a loan from a lender at this point, the rent to buy program ends. You will then have your own loan on the property.
The Benefits of a Rent to Own Program to Buy a Home
You can become a homeowner without having money down, but you’ll need to start looking for homes for sale through rent to own programs. One last thing you might want to do before you buy a house like this is to learn the benefits.
The first benefit of buying a house through a rent to own deal is that you can become a homeowner without having money for your down payment. If the down payment on a house is stopping you from buying one, this program can help.
The second benefit is that you can void the deal if you decide you don’t want to buy the house. You’ll have to notify the seller that you don’t want to buy the home, and you can end the deal at any time.
You’ll find that this program offers many other benefits. If you have questions, talk to a company that offers rent to home deals.
How to Get Started
If you want to buy a home, don’t let your lack of cash stop you. Through rent to own program, you can purchase a great home that is yours!
At Home Buyer Creators, we help people become homeowners. If you are interested in learning more about our services and options, contact us today. We’d love to hear from you!