Investing in property is an excellent way of spending your money wisely. However, coming up with a large down payment is an obstacle to many prospective real estate investors. Thankfully, it is possible to learn how to purchase a second home with no down payment.

If you are looking to buy a second house with no money down, you’ve come to the right place. We will examine buying a second home without a sizable down payment.

Is it possible to buy a second home with no down payment?

First, can one purchase a second home with no down payment? Absolutely. It is possible to purchase a second home with no down payment, and you don’t have to house hop to do it! In other words, where you buy a house, wait for it to appreciate in value, and sell it in order to purchase another one.

However, the most cost-effective financing options for home purchases are available with no deposit requirements. These are often government-backed programs, such as the FHA loan or the USDA loan, among many others.

You could take advantage of one of these government-run programs to transform your second home into your primary residence.

Even though it is a nuisance to move, it has the potential to open the right doors for the foundation of your real estate portfolio. You could rent out your current home and move into a second home in order to escape down payment requirements.

Second home mortgage requirements

It can be difficult to find a second home mortgage with no down payment requirements. This is because lenders view more risk in their lending for the second home. This risk means that lenders will likely have more stringent second home mortgage requirements.

For instance, if you are buying a second home to rent out, in order to qualify for a mortgage (and any tax deductions) you’d need to:

After a few discussions with your mortgage lender, you can organize your affairs accordingly.

How to buy a second home without a down payment

Purchasing a second home without a prepayment can provide the financing you need to begin investing in real estate.

Here are some ideas to consider as you explore the purchase of a second house.

USDA loan

USDA loans are backed by the U.S. Department of Agriculture. Depending on your circumstances, you can be eligible for zero-money-down financing on this home. However, you must be prepared to make this home your primary residence within a few months of closing.

Although USDA loans are aimed at rural development, they are only available in certain areas. Specifically, USDA loans are intended to help rural communities.

You can use the handy map to find out if the area you want qualifies for the United States Department of Agriculture requirements. Additionally, you cannot earn more than 115% of the median household income of the area to qualify.

There are different requirements for USDA loans, but it is a helpful option for buying a vacation home with no down payment. Purchasing a second home with no down payment may be possible with a USDA loan.

VA loans

VA loans are backed by the Department of Veterans Affairs to help veterans and military personnel achieve homeownership. As an eligible veteran or military member that satisfies the requirements, you can obtain a loan without putting down a down payment.

In exchange for the utilities at this property, you will have to move there within a few months of closing. However, you could rent your current home in the meantime.

As an eligible veteran, you can use the VA loan multiple times. Each time you pay off an existing VA loan, you can take out another VA loan.

FHA loans

FHA loans are government-guaranteed mortgage loans offered by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development.

Like the loans available through this list, the Depending on your financial situation, you may need to pay 3.5% to 10% for a mortgage.

You’ll want to come up with a down payment fund. The down payment requirements are considerably less strict than the standard custom of putting down 20% on a house purchase.

Assumable mortgages to buy a second home

In certain cases, you can pursue an assumable loan. As a result, you would take over the mortgage payments of the seller’s preexisting mortgage.

It may not be a typical opportunity, but it could be suitable for you. You won’t have to make any down payments. Instead of paying the previous owner, you’ll just begin making payments.

Using the home equity in your current home

If you have a large amount of equity built up in your current home, then tapping that resource could help you pay the costs of purchasing a second home. For example, you can use a home equity loan or a home equity line of credit to pay for the costs of your new home.

But depending on your condition, it may be worthwhile.

Buy A Second Home With No Down Payment
Buy A Second Home With No Down Payment

Make sure to thoroughly read this information and take into account your individual financial situation before making any decisions.

Should you buy a second home with no down payment?

Dependent on your situation, buying a second home with no money down may be a good choice. In other circumstances, you may be better off waiting until you can afford to purchase a second property.

A second home without a downpayment will be more expensive over time, but if you have a specific real estate goal in mind, it could be well worth it.

Are you looking for help in starting your real estate career? Take a look at our comprehensive guide to help you get started.

The bottom line to buying a second home with no money down

A real estate portfolio is a great way to obtain passive income into your life. As you choose your options, learning how to buy a second home without a down payment is a smart financial move.

Now that you understand more, you can make a knowledgeable decision about participating yourself.

Remember, there is no right or wrong technique to pursue real estate investing. Move forward with a strategy that you feel most comfortable with.


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