How to get a loan with good credit and no down payment

Question

Hello my Names Taylor and I'm trying to gain as much knowledge as possible. I've been reading about investing with no money down and no credit and I really haven't found the answer to my question. How can I get a loan with decent credit (720-740) but with no down payment? Is it possible?

Corby Goade · Answer

Another way to look at the "no down payment" concept is to think of creative ways of moving equity around. Once you have a certain amount of equity and an understanding of the financing options available to you, you can just shift equity from property to property in the form of a down payment. To put it simply, a bank (or any lender) isn't going to require that you show up to closing with a wad of cash, they just generally don't want to loan more than 80% of the value of the property. The intent of the "down payment" protects their interest in the property, giving them a buffer with your equity, and shows them that you have "skin in the game." Equity is skin in the game, that's your cash.

David Dachtera · Answer

@Taylor Uhls,

You might also want to consider that "No Money Down" may just mean that the down payment doesn't come from you.

Corby Goade · Answer

@Taylor Uhls, I wouldn't recommend hard money as a down payment, especially for your first deal. Hard money is expensive and the terms are usually designed for an investor who is going to be able to cash out quickly. If you are looking at some multi families, why don't you find one that you could live in one of the units so that you could qualify for FHA? You'd only need 3.5% down, so on a $60K property, you'd be looking at a couple thousand dollars. I don't know about your town or the neighborhoods that you are looking at, but the numbers you mention above are good deals on paper.

Taylor Uhls · Answer

And those properties I found are about 2 hours away from where I live which sucks

Taylor Uhls · Answer

@Corby Goade that is what I've been thinking on for a good while now. Banks will do FHA on 60,000?

Taylor Uhls · Answer

I have thought a lot about moving equity to use as a down payment for another property, the thing is I'm 22 and I don't own any property, what about these hard money lenders? @Corby Goade @David Dachtera

I have a few properties in mind as of now one is just for 30,000 it's a multi family it brings 650 a month has two tenants already there I ran the numbers and it comes out right at 100$ per unit after mortgage and 50% rule. Found another for 60,000, triplex, 1350 month, ran the numbers and its roughly 125$ per unit my thing is I don't know where I would get the 12,000

David Dachtera · Answer

@Taylor Uhls,

Networking events are best. REIA meetings and such.

Check out MeetUp.com for real estate gatherings in your area, also.

Taylor Uhls · Answer

Thanks again @David Dachtera My question is the same as Bradley's being new and inexperienced how would you go about finding a partner. What kind of real estate investing are you most active in? I'm want to buy and rent, lease to own then sublease, or possibly finance by owner. Is this a good start? How would you or did you start when you invested in your first property. Thanks for any feedback it is undoubtedly appreciated.

Also thank you @Bradley Gregg for those great questions

Bradley Gregg · Answer

Good questions, Taylor. I am in a similar position, so been thinking through the same questions. I appreciate the opportunity to read the answers.

David, when new to this, how do you find a partner...someone that can provide the down payment? I may be way off, but it feels like the first property is the toughest to buy, since I do not have experience as an investor and I do not have money set aside for a down payment. Any advice is appreciated.

David Dachtera · Answer

@Taylor Uhls,

The lender on the larger loan would want the down payment to be your money, not borrowed.

One way to do this is with a partner, possibly a Joint Venture.

How to get a loan with good credit and no down payment

How to get a loan with good credit and no down payment

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