How to Buy a Second Home With No Down Payment

Buying a house is not only a daunting task but also expensive. It is a huge investment as you must flush out a lot of money. However, you begin to feel the heat regarding the down payment. Most of the houses you purchase come up with an initial down payment. So, if you want a second home, you must expect a higher interest rate than your primary home.

Usually, people want to buy a second home to use for a vacation home or any income-generating activities. However, you may face some financial crisis while purchasing a second home for yourself. Hence, there are some options where you can get a second home without any down payment.

How to Buy a Second Home With No Down Payment


9 Possible Ways to Buy Second Home With No Down Payment

1. Consider Some Extra Costs:

If you are planning to buy a second home without any down payment, you must be ready for extra costs. If it fits your monthly budget, then you can go for it. It is because an additional mortgage payment can be costly for you. Moreover, you need to check the interest and principal fees before opting for a second house for yourself without any down payment. If you already have a primary home, there are certain expenses for its maintenance. Ultimately, it can become a costly affair for you to manage both houses. Hence, it is essential that before planning to get a second home, check all the possibilities so that you do not end up in debt. However, it can be easy if you already have the money for a second house.

2. Check The Market Rates:

The prices of houses are sky-rocketing with time. It also depends on where you want to buy a second home. Since hot areas have a high demand for places, it can be costly. Hence, it is better to get in touch with an experienced real estate agent who is familiar with the area of your choice. So, instead of wasting your time looking for a second home, get hold of a broker and explain your budget. He may make things feasible for you and get you the home you want according to your budget. However, it is advisable that if you find the market trend moving upwards, it is better to stop your search and wait for the fall in the prices of houses.

Also Read: Benefits of a Mortgage Broker

3. Estimate Your Monthly Payments:

If you have found a second home of your choice, before jumping to any conclusion, estimate your expenses. There are two options, down-payment, and monthly installments. If you are comfortable with it, you do not become financially unstable. You must always check your monthly installments without making a down payment; you can consider the choice. Also, you must check the amount that you need to give monthly along with interest towards your second home. Moreover, if you are going for a no down payment option, then you will have to bear for the private mortgage insurance.

If you are finding it difficult to eat up all your savings to purchase a second home for yourself, there are other options.

4. Apply For a VA Loan:

One of the best ways to buy a second home without a down payment is to apply for a VA loan. However, to be eligible for a VA loan, you need to be either a veteran or an active member of the US armed forces. A VA loan does not require any down payment and replaces the requirements of your mortgage insurance. It will relieve you of the heavy down payment for buying a second home.

See Also: How to Buy a Fixer-Upper House With No Money

5. Consider An FHA Loan:

The FHA loan is an excellent option for buying a second house with as little as a 3.5 percent down payment. You can get the FHA loan as a financial gift from any family member. The sellers can also cover the closing costs by contributing about six percent of the sale of the house. It is an effective way of purchasing a second home with minimum or no down payment. One of the most significant advantages of obtaining an FHA loan is that there are minimum qualifying criteria to get approval for the loan.

6. Get Help From The Home Buyers Assistance Program:

If you are a first-time buyer and want to purchase a second house for yourself without any down payment, you can get help from the Buyers Assistance program. There are various local and national programs that offer different types of financial assistance to those who cannot afford to buy a second home with a heavy down payment. It relieves them from a financial crunch and, at the same time, helps them to get a second home of their choice. Hence, looking for local, state, Non-profit, and similar programs is better.

7. USDA Loan:

A USDA loan is one of the best options if you do not want to pay any down payment while purchasing a second home. The USDA loan is otherwise known as the rural development loan. However, you need to qualify for the loan where you do not have to pay any down payment. Moreover, you will get a total amount of loan equal to your second home’s purchase price. The USDA loan applies to those areas that fall under rural and developed areas. You also need to qualify for the loan by meeting specific eligibility requirements. However, to be eligible for a USDA loan, you need the following criteria:

  • You must be a citizen of the United States of America.
  • Your gross income must be more than 115 percent of the median income of the area where you are living.
  • You must show that you have a steady income and can make any future mortgage payments.
  • Your debt to income ratio must be less than fifty percent.
  • You must have a minimum of six hundred and forty as your credit score.

See Also: Forgivable Equity Builder Loan Income Requirements

8. Receive A Financial Gift As The Down Payment:

One of the easiest ways to buy a second home without any down payment is when you receive a financial gift from your relatives. You can use the money to purchase a second house without investing. However, it would be best if you showed that you received the money from your close relative as a gift. Moreover, obtaining financial assistance from a relative must not have any repayment options. It is a great benefit when you receive a financial contribution from a relative as it can help you to lessen your burden.

9. Let The Seller Pay Closing Costs:

One of the most innovative ways to purchase a second house without a down payment is to get the seller to pay the closing costs. It depends on several factors, including the current real estate market in the area. If the housing supply exceeds demand, your seller may not agree to pay some closing costs. Moreover, asking the seller to pay the closing costs is unreasonable when the market is high.

Therefore, in a seller’s market, where the demand for houses is high, it is most likely that the seller will not cover the closing costs. However, if the need for homes is less, it is advantageous for you as you may ask the seller to pay for the closing costs.

Things to Keep in Mind Before You Buy a Second Home With No Down Payment

  • It depends on the type of mortgage you select, as it predominantly affects your mortgage and the amount you need to pay. It can primarily affect your monthly mortgage payment.
  • If you put your own money for the down payment, you are paying less for your monthly income. Moreover, if you are paying a lower down payment, you are paying less on your monthly expenses. You also have to pay more interest rates.
  • A minimum down payment means that you have to pay more on your monthly expenses, and you also have to pay for more years.


It is always exciting to buy a second home for yourself. You can use it for various purposes or as an income generator. However, it would be best to consider certain factors before buying a second house for yourself without any down payment. If you are in a situation where it would require you to clear your savings account, you must first consider other options before jumping to any conclusions. The best option is to create a budget and search for the best. Getting in touch with the local real estate agents who will help fulfill your dream second home is advisable.

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