Can I Buy an Investment Home Without a Down Payment?

There are a lot of opportunities for real estate investments throughout Northern Virginia, DC, and Maryland. As an expert in real estate investments, I’ve helped hundreds of people find and purchase their very first investment or even their 10th investment property throughout the area. Because I know the laws, regulations, and how to find the perfect property for their needs, our buyers walk away from the closing table with the perfect real estate investment. But, one of the most common things I’ve been asked is how to buy an investment property without a down payment. Is it possible? Will your interest rates be higher? There are a lot of questions that come along with that question but I want to answer a few of them in this post. Remember, at any time you can contact our office and speak to me directly about any type of real estate questions and investments you might have.

Can I Buy an Investment Home Without a Down Payment?

Here are some ways to buy an investment property without a down payment or with a very low down payment.

#1. Roll the down payment into the purchase price of the home.

This depends on your credit rating and the purchase price of the home. Higher interest rates could make your payments go higher if you don’t have a lot of down payment but, as long as the home appraises for the inflated amount, a lot of times this is a great option for buying an investment property. However, there are lenders that specifically loan to investment properties versus primary residency so it’s important to discuss your needs with a qualified lender.

Read More: The Best Way for Millennials to Invest in Real Estate

#2. Seller financing.

This is a popular 100% type of financing but it can mean a lot of work for both parties. Not only will the buyer need to find a motivated seller that will carry the financing but you will probably be paying higher interest rates. However, this could be a great option for the right scenario.

#3. Consider buying on “wholesale”.

This is similar to flipping a property as wholesaling is a fast real estate investment strategy where they contact the seller, advertise the home to potential buyers, and when the wholesaler assigns the contract to the buyer, the wholesaler makes a profit between the contract set up with the seller and the amount the buyer pays. Of course, this is also a very tricky and yet successful option. Again, this is nothing that should be entered into without an experienced investment real estate agent that is familiar with all of the details of this type of transaction.

Related Information: 5 Critical Points to Remember When Buying Cheap Real Estate

#4. A private loan.

Private loans are alone strictly between a private lender and the buyer. Both parties negotiate terms to fit the deal, which could also mean zero payments for a short time in order to collect the money needed to pay off the loan. If you’re going with another lender for the major purchase of the property, an additional loan could alter your debt to income ratio making your interest rates higher or voiding the option of borrowing the money in the first place. However, this can work in the right situation.

#5. Look for loan assistance programs.

These programs allow buyers to put little to no money down on real estate purchases. There may be allocations for investment properties versus primary residences and there may be higher interest rates and stricter terms, but it can be a great way to get into the real estate investment world.

#6. Ask the seller to transfer the mortgage to you.

This is common during foreclosures where the homeowner is motivated to sell and willing to work with just about any buyer. Again, don’t enter into any type of contract like this without an experienced agent helping you facilitate the transaction. You want to be protected on all sides.

Read More: Never Do These 5 Things When Investing in Real Estate

These are just a few ways that you can invest in real estate without a lot of money down. And, this is just a few of the options. There are other options out there for the right situation. Rent to own, investment partners, using down payments other than cash, and other options may work for your situation. One of the best things to do is simply contact my office. Let’s discuss your needs and what you’re looking to get out of an investment property. We’ll discuss your finances to find out the best program that will work for your needs and for a successful outcome.

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