It’s a good idea for homebuyers to pay 20% down on their down payments. A 20% down payment can help you get a lower interest rate, and more favorable terms. You can finance a home even if you don’t have enough cash. Property Nest founder Ruth Shin and CEO says there are many options for buyers, particularly first-time buyers with good credit. Here are five alternatives to homeownership if you don’t have the money for a downpayment. Government-Backed Mortgages. The federal government offers a variety of mortgage programs that allow homebuyers to make very small or no down payments. FHA loan program allows first-time homebuyers to make a down payment as low as 3.5% if their credit score is not lower than 580.

If your credit score is less than 580, you can put down as little as 3.5%. Shin also recommended Dollar Homes as a federal program to consider if you’re looking to buy a house without having to make a down payment. These are houses that have not been foreclosed on for six months or more, and homes that were abandoned.

Because it is in the best interest of the government to sell these homes as soon as possible, they are often sold at a fraction their market value. This could allow you to purchase one with cash, or a small downpayment. Shin said that renovations will be required for these homes. Seller Financing Sometimes sellers want to sell their homes as quickly as possible. Shin said that sellers who are willing to accept flexible payment plans are more likely to do so. If you’re a skilled negotiator, it is possible to finance a home from the seller. Seller financing, also known as owner financing, is a type of financing that is directly provided by the seller, and not by a financial institution.

This will allow you to eliminate the middleman as well as many restrictions and rules that are associated with traditional mortgages, including the minimum down payment requirement.

Rent-to Own A hybrid of leasing and financing, rent to own agreements allow you rent the house you desire for a specific period of time. After the agreed-upon period, you have the option of purchasing the house at a lower rate. Shin explained that in most cases, a portion of your rent will be set aside to pay a down payment.

Contract terms can be very flexible. An option fee is an upfront payment, which can be anywhere from 1% to 5 percent of the purchase price. You may have to pay for repairs or maintenance while you rent the property. While renting the property, you may be responsible for any maintenance or repairs. If you buy a house before it has been sold, you won’t be allowed to use the proceeds to finance your new property.

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Shin agreed with non-profits and real estate investors. Shin said that having strong financial records and equity in your home can make it easier to qualify.