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With Uncle Sam's Help - My First "No Money Down" Deal

Aug 17, 2007
When I was in my early thirties I became interested in real estate again. The first time was in junior college, but I never followed up on it due to a declining real estate market at the time. Now, after a few years as an electronic technical, I had just gotten my first job as a programmer trainee. During the two years I worked for a large insurance company as a programmer several of my classmates bought houses. They were married or had money given to them for the down payment and house prices were still relatively low so they could qualify for a loan.

I wanted my first house
That's when it all changed. I had not given much thought to having my own house. I was a happy single with a nice apartment and my little red 1963 Corvette Sting Ray convertible. It was a rare fuel injected model which I had searched long and hard to find. It was a fast little car. I had a couple of other cars too and I guess I needed a garage to keep them in instead of the carport at the apartments where I lived. Although my salary was good it was still too low to qualify for a house. I figured the only way I could get one was to either get married or get a better job. I had no marriage plans.

My strategy to qualify
Better job it was. First a switch to a large bank holding company in Los Angeles for a year, then to a high class credit card company on Wilshire Boulevard. That looked promising as my salary had taken a nice jump during those two jobs. It didn't last long as my work hours were switched to a starting time in prime rush hours. I quit to avoid the two hour drive from my place in Monterey Park. Before I quit, however, I found a better job in Arcadia about a half hour away from my apartment.

There was no break and after quitting on Friday I was ready to start my new job Monday morning. I had just locked the door and was walking toward my car when I heard the phone ringing inside. I kept walking, then hesitated and decided I better try to answer it. I rushed in and answered the phone. It was a call from Southern California Edison with a job offer starting that day. It was an offer I couldn't refuse. It was a better job with a huge utility company, higher salary, and better benefits. After calling the company I was originally heading to, and apologizing about now not being able to take the job, I headed off to Edison.

Finding a house
My salary had now doubled in about two and a half years. Now was the time to look for a house. I knew even then it would be marginal qualifying, but I had to try. I had no down payment but I could easily make monthly payments on a house. I immediately turned to my sister Kay, who was a part-time real estate agent. I was lucky. I got first shot on a brand new listing my sister had just gotten. It was a small single family house near West Covina, California. Not quite in the area I wanted, but sometimes beggars can't be choosy.

Making an offer
I made an offer slightly below the asking price for the home. In my offer I specified I required a VA (Veterans Administration) loan. Some sellers don't like to sell to anyone that wants a VA loan due to some extra costs plus the house requires a government inspection. My offer was accepted. The seller agreed to the VA loan and to pay all the points (costs of getting the loan). When the house was inspected it required adding some supporting brackets on the small patio, which was done inexpensively. Then it was inspected by the County (a fee was paid) and fortunately it passed with no problems.

The hard part: Qualifying
Now the hard part. Qualifying for the loan is almost always a problem as the lender always seems to have some problem with something on your application. True to form, there was a credit problem I had unresolved from a loan I had previously had with a loan company. They had threatened my parents numerous times when I was late making a payment and I had refused to pay them anymore, since my parents weren't involved in my finances and I hadn't lived with them in well over ten years. That was finally resolved, but not without difficulties. I was then sweating it because my critical debt to loan ratio was marginal.

I got my house
Finally I got the house, a "no money down" deal financed with a VA approved loan. I got a twenty-two year old house for $39,000 with payments of $360 a month. That was a while ago when prices were not as astronomical as they are now, but nonetheless a typical priced house for those years.

Looking back, and even at that time I felt that was the best bargain I ever got from the military. I disliked the Army, due to being based in the southern states where there was so much discrimination, even in my own platoon. But the ability to get a house with no money out of my pocket is a great benefit for those of you who have served in the military.

A VA Loan may be possible
And even if the house you want does not offer a VA loan it may still be possible to get one. An example is the home I live in now. A different, much more expensive home, than my first one mentioned above. My home was new and the builder did not offer VA loans due to the higher cost of the house. I was then familiar with how to get a VA loan so I knew it might be possible to get one, even though none was offered. I checked with a local real estate company and asked for the maximum amount the VA would finance in the area my house was in (it varies in different areas). I then asked the builder if I paid the difference between the maximum the VA would finance and the price of the house would they be willing to sell the home to me under the VA loan program? At first they didn't want to because the property has to be inspected and approved by the VA, but finally they said ok. I got my VA loan with a $28,000 down payment with the very best financing, a government approved assumable VA loan.

VA Loans are for veterans
One thing I need to clarify is under the normal VA loan program (there are others) the loan is not actually a government loan. It is a loan that is approved and guaranteed by the Veterans Administration. Under normal circumstances VA loans are normally only given to Veterans of the US Military. Under some other programs anyone can get a VA loan, but those are the exceptions, one of which I allude to in my series of articles on some of my "no money down" deals.

If you are a veteran and have not considered getting a VA loan to buy a home don't ignore its potential. Although the rules have changed some since I got my last VA loan they are generally a good deal, especially for your first home where the price is usually lower than if you are moving up in homes. You can also get a VA refinance loan. However the last time I checked, a couple of years ago, there was a huge cost to get a VA refinance loan. Check with a Realtor for the VA requirements in your area. You can't really go wrong with a VA loan. And who knows you too might follow in my footsteps and end up with more than one VA loan. I did and consummated several "no money down" deals.

Copyright (c) 2007 Charles Harmon
About the Author
Charles is a software developer and owns several websites. He creates websites and writes articles. Charles is collecting recipes right now. View and add your own recipe to the site. From this site you can download free computer software. Charles is also interested in real estate investing.
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