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You hear those words "down payment" and immediately begin to worry. You think, "I am near broke now, how will I ever afford my own home?" Take a deep breath and relax, most people worry- because they are scared of the unknown.

When your looking to buy a home this is the first thing you think, "will hold you back." Traditionally in the past, you needed 5% to 20% of the cost of the home as a down payment. This is very true when dealing with some real estate agents.

If you have saved some money to put down on a home, (congratulation), you are one step closer and there are a few good reasons for this; the first one is it could lower your monthly payment, the second is it shows your commitment to buying the house, also it may help you get a more appealing interest rate.

Many banks these days do offer a 100% financing. I am sure this sounds good to you. If this is your first home or not and your credit rating is good, this may be the way to go. The interest rate may be slightly higher than that of a person that does put down 10% on the home, not all of us have a box of money lying around.

There are other ways to get into a home with out putting down a large down payment. If your credit is less than perfect, don't worry. Have you ever heard of a land contract?

Land contract are just like getting a loan, though in this case you are usually borrowing money from the owner of the house. Houses that are "for sale by owner" are more likely to offer this. This is one of many creative ways to buy a house and yes, it does work. This is how I bought my first home. Yes, there was a real estate agent involved. Find a real estate agent that is willing to help you in this way may take some looking, but they are out there.

With a land contract there is risk however, more so than that of a loan from a bank. You cannot miss any payments, you can be late, but unlike a bank, this may cost you more than just a small late fee. The house payment should be your first priority.

On the up side to this, you can defer the down payment with a promissory note (that basically is saying you will pay a certain amount of money at a later date).

The land contract that I used said; I would also go to the bank at the end of a year's time and try for another loan for the price of the house that I now owed. After paying the payments for a year the bank had no problems giving us the loan.

At that time in my life, I had just got married and our credit was less than ideal. For us it worked out great.

Creative financing is not new; it has been around for many years, now it is heard of more often. There are a few things you need to know and there are many good books on the subject. Doing a little research is well worth the effort.

Often times, finding a real estate agent that is willing to go this rout, is harder than finding the house itself. If you have one that will not help you in this area, find another one that will. After all, they are working for you.

As a rule, homes "for sale by owner" are usually more flexible than those offered by a real estate companies. Always remember that the house offered by a real estate company, still has an owner and he or she still wishes to sell their house. Houses that have been on the market for a length of time will often be more motivated than one that just got added to the market. Do your homework and don't be afraid to ask.

Learn more about this author, Martin Ward Jr..
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