Creative Real Estate Financing Methods

Creative real estate financing goes beyond putting down a down payment and getting a loan from a bank. Here are ten more options.

Now is the time for creative ways to pay for real estate. You might remember when you had to save enough money for a 20% down payment on a house and then get a mortgage loan for the other 80%. You can still do that, but you have a lot more choices these days. Here are the first ten.

1. Loans from sellers for a second mortgage. Many banks will let you buy a home with as little as 5% down, but they will only lend you the other 80%. The other 15% can be paid by you through a second mortgage that the seller can take out.
2. Bank no-doc loans. "No-doc" and "low-doc" loans, which don't require much paperwork, are back, and you can find them at online banks. They are for people who have bad credit but still have 20–30% to put down on a house. You don't need a job at all.
3. FHA mortgage loans. The Farm Home Administration doesn't actually give you the money. Instead, it guarantees the loan for the bank, which means they can give you up to 97% of the purchase price, depending on the FHA programme.
4. Manufacturer loans. Companies that sell manufactured homes are helping their buyers get loans with 5% down or less. This can be as low as $2,500 if you already own the land where the house will go.
5. Housing programmes run by the state government. Most states offer low-income buyers some kind of help with financing, like a loan-guarantee programme or a loan outright.
6. Builders gifting programmes. In some parts of the country, builders pay for foundations that give you part of the downpayment. This means that you can buy a home with as little as 3% of your own money as a downpayment. So far, FHA and other lenders have okayed or let this happen.
7. Loans from friends and family. If your brother or a friend gives you money to buy a house, it might not be out of kindness. If their money is sitting in the bank earning 2%, a return of 7% might look pretty good.
9. VA mortgage loans. A VA loan can help you buy a home if you have served in the military, have a good job, and can save two or three paychecks.
10. Contract for sale. Depending on where you live in the country, this is called a "land contract" or something else. It just means that you pay the seller instead of a bank. You and they will have to talk about the amount of the down payment, the interest rate, and the length of the loan.

So, are there other ways to finance a piece of real estate? Yes, there sure are. Here are a few ways you can buy your own home. When you start investing, you can use other ways to come up with creative ways to pay for real estate.