Last Updated on June 10, 2022

Investing In Real Estate With No Money Down


Investing in Real estate with $0 Money Down

Table of Contents

  1. Hard Money Loans
  2. Seller Financing
  3. Microloans
  4. Government Loans
  5. Partnerships
  6. Private Money Loans
  7. Lease Option
  8. Assume an Exisiting Mortgage
  9. Purchase a Multi-Unit Home
  10. Home Equity Line of Credit (HELOC)

Are you interested in getting into the real estate game, but fear you might not have enough available cash or equity lying around to get started? Well, you’re not alone. As a matter of fact, most people who want to dive into real estate don’t have enough money for a down payment or they don’t want to put all their money into the purchase of an investment property.

But, believe it or not, it is still possible to invest in real estate with little or no money for a down payment. The fact of the matter is, that money has to come from somewhere if it isn’t coming out of your own pocket, so the key is to utilize the resources at your disposal and use your existing assets as leverage. 

Let’s take a look at 10 different ways to invest in real estate with no money down.

  1. Hard Money Loans

Hard money loans are one of the most common ways house flippers secure financing to invest in real estate. Hard money loans are also referred to as “last resort loans”, because they help real estate investors get fast funds for homes, and are particularly useful if you want to move on a deal swiftly, but don’t have additional money to use as a down payment. 

Hard money loans have a very distinct advantage: they can be approved extremely quickly. In some cases, they can be approved in just a couple of days, which is significantly faster than the approval rate for traditional mortgage loans. 

In real estate investing, time is just as valuable as money. Hard money loans can be approved so fast because they use the property as collateral, meaning that if a borrower defaults on the property, the hard money lender owns the property, which they can sell if they choose to do so.

However, this is a significantly riskier process than traditional mortgage financing. Hard money loans have high interest rates of 8–15%, short repayment periods, and lower LTV ratios. This is tremendously higher than the just higher than 4% interest rate of traditional mortgage financing, as well as the repayment periods of 15 to 30 years. 

    2.  Seller Financing

Seller financing is another option for those looking to purchase an investment property without any capital upfront. With seller financing, the seller of the property handles the mortgage process instead of a traditional institution, such as a bank or credit union. The two parties sign an agreement that states a specified interest rate, repayment reschedule, and consequences of default that both sides have agreed upon.

This method works well for homeowners who are extremely motivated to sell their home and for those who don’t have a mortgage. If a seller is looking to move on from a property quickly, they are more likely to work with the buyer, and are generally more flexible than traditional lenders.

Seller financing can provide sellers with significant capital gains tax savings over time and a  faster time to sale, with the ability to sell your property as-is without the need for repairs. Additionally, it can be advantegoes for buyers, as it offers increased financing opportunities, flexible agreement terms, and lower expenses associated with closing costs.

  3. Microloans

Microloans are a viable option for those looking to invest in real estate with no money down. Microloans are smaller loans, that generally go up to $50,000, and have relatively short repayment terms. Many borrowers will use microloans if they do not have access to local financial institutions, if they have bad credit, or if they want a loan smaller than what their bank will allow.

Like a traditional loan, microloans provide the borrower with a lump sum of cash that is to be paid back with interest of a set period of time. Investors can then use this money to place a down payment on an investment property that they’re interested in. 

Microloans are a form of peer-to-peer lending, which allow individuals to contribute to the loan, as opposed to a traditional financial institution. Typically, they are paid back over three to six years, but the timeframe can very from lender to lender.

  4. Government Loans

While many restrictions can apply to utilizing government homes to invest in real estate, there are ways to do it. Some government loans that may you have previously heard of are:

  • VA Loan
  • FHA Loan
  • USDA Loan
  • Section 542 Grant
  • Good Neighbor Next Door Program
  • FHA Section 203

Investors who are on a tight budget and are seeking financing can benefit from government loans. These government loans to buy investment properties help investors to purchase or sell real estate as well as make modifications when they buy property as an investment opportunity. 

However, you must be aware that not all government loans are suitable for a quick turnaround. For example, VA loans can only be applied to one home at a time. Alternatively, FHA loans consist of loan durations that are much longer than private and hard money lenders. In addition to these factors, government loans can take months to finally be approved, which turns many borrowers away.

  5. Partnerships

Partnering with a co-borrower is one way to invest in real estate with little to no money upfront. Partnerships can be mutually beneficial to both partners because each investor is bringing something different to the table. 

For example, let’s say you want to start investing in real estate, but you don’t have the capital for a down payment. However, you are willing to do the research and find undervalued properties that could potentially be flipped for a profit.

On the other hand, a friend or family member that you know may also be interested in real estate investing, and have the money to do so, but might not have the time learn the ins and out of fixing and flipping properties. 

In this scenario, a partnership could be beneficial to both of you because you can use utilize your real estate investing expertise to identify investment opportunities while your partner provides the funds to help you get started. 

In partnerships, it’s crucial that both parties are bringing something of value to the table. Be sure to lay out defined roles and goals with your partner before investing to ensure that you’re both on the same page. 

 6. Private Money Loans

Private money loans are another method of delving into real estate investing without any money down. A private money loan is money lent by a private individual or business for a purchase. 

One great thing about private money lenders is that they can use whatever criteria they want when “qualifying” the person who is requesting to borrow from them. Loans from a private lender are also known to be fast and efficient, and don’t require a great credit score from the borrower. 

However, as a result of this freedom and flexibility, there are also downsides that come with it. Private money loans are generally accompanied by high fees and interest payments, plus the payback period is usually shorter than those of other types of loans you might find.

 7. Lease Option

Also known as a “rent-to-own” home, a lease-option is yet another way to finance an investment property with no money upfront. A lease-option will allow you, as an investor, to acquire a property without taking legal ownership of the property right away. But, you will be required to agree to an “option to buy” from the homeowner at a certain price in the future. Essentially, the investor will be able to rent out the property long-term with the option to purchase it at a later date at the previously negotiated price. 

A potential buyer may have many reasons to use a lease option rather than buy the property outright initially. A major consideration is not having enough money or credit to purchase an investment property. Renting for a set period of time can allow the potential buyer to save money for the purchase and simultaneously build their credit by making payments consistently.

 8. Assume an Existing Mortgage

An assumable mortgage allows a buyer to take over a seller’s mortgage, typically with little to no change interest rate. The buyer essentially receives the title to a property in return for making monthly payments on their new investment property. 

Using the seller’s existing financing can be especially effective if the current loan has a low interest rate. An assumable mortgage can also help you save on closing costs, because unlike the expensive closing costs of a new mortgage, assumable mortgages generally impose limits on assumption-related fees, which can save you tons of money in the long run. 

 9. Purchase a Multi-Unit Home

Multi-unit homes can be an excellent way for beginning real estate investors to get started buying properties that generate income. A multi-unit home is a property that contains multiple units, which allows you to live in one of the units while you rent out the others. 

The first step is to find a good deal on an undervalued multi-unit property. Most of these properties contain two to four units. Once you purchase the property, you can live in one unit, while renting out the others. The rent payments you collect can help offset your mortgage payment, so you might be able to live mortgage-free.

“But, how am I supposed to afford a multi-unit property without any cash down?”, you might ask. The key here is that multi-unit properties can be bought using an affordable financing option, such as an FHA loan or VA loan, as long as you live in it, too.

 10. Home Equity Line of Credit (HELOC)

If you already own a home, you may be able to use your home’s equity for a down payment on your investment property. You can do this by borrowing cash secured against your home equity. Homeowners may be able to obtain a standard home equity loan, or a HELOC, to fund a down payment.

By using a HELOC, you establish a line of credit against your home, and then draw on it whenever you need an influx of cash. Then you can begin paying the loan back with rental income.

HELOCs tend to have very low or no origination fees and are relatively simple to get, which makes them a more attractive option than a refinance or cash-out refinance for many borrowers.


Now that you know it is possible to invest in real estate without having a lump sum of cash at your disposal, we highly recommend imploring some of these methods if they fit your lifestyle. Even if you have a low credit score, it’s important to know that you do have options. 

Review the methods above and see which one is most suitable for you. Don’t be afraid to start small when investing and work your way up over time. Establish and analyze your short and long-term goals for real estate investing, and determine the best past of success to get yourself there. 

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