How Do I Begin Investing in Real Estate Without a Down Payment?

One of the biggest challenges to beginning a career in real estate investing is raising enough money for a down payment. Aspiring investors may be stuck in an endless cycle:

  • Start their search.
  • Get discouraged when they can’t afford a down payment and rent instead.
  • They feel guilty about not following through on their dream.

Luckily, there are other options for investors looking to get their foot in the door. Here are some ways to start investing in real estate without a down payment.

Get creative with financing.

There are many different lenders and even more types of loans that don’t require a down payment, such as:

– FHA Loans: A Federal Housing Administration loan is available to sellers who are willing to help buyers with less than perfect credit.

– Conventional Loans: These loans are not insured by the government but can offer very competitive rates and flexible guidelines for borrowers.

– Seller Financing: Including an owner carry-back or land contract allows the buyer to finance 100 percent or close to it.

– Bridge Loans: This type of loan is used to cover the down payment gap between an FHA and a conventional loan.

Live in your investment property.

There are many creative ways to invest in real estate without a down payment, but there’s one that stands above the rest – live in the rental yourself. While this option has its pros and cons, it allows you to begin collecting rental income immediately and start building equity without parting with a single dollar of your own.

If you can afford not to take on any additional debt, then the best way to start investing in real estate without a down payment is to live in one of your properties.

If you don’t want to move in, you can always rent it out. This is an excellent long-term strategy whether or not you have a down payment saved up, but make sure to check local laws around rentals for your area.

Take advantage of seller financing.

While some sellers are willing to help buyers by offering terms, there are a lot of deals out there that can close without a down payment.

This is an excellent option for would-be investors who can put at least 20 percent down since it’s easier to secure financing with shorter timelines and smaller debt ratios if you have something to show that you’re seriously invested in the property.

Call your local real estate agent for more information on current seller financing terms and get started.

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Secure a small down payment and build equity over time

The smaller the down payment, the less you stand to lose if you decide to back out of your investment entirely. Over time, through consistent rental income and slow but steady increases in your rental value, you’ll be able to build up equity.

Attend real estate investing seminars for more information about alternative lending options

While it’s possible to get started with real estate investing without a down payment, some things are worth spending on to avoid extra fees and interest charges.

For example, credit checks are usually required by most real estate investors looking for financing. If you’re not planning on running a background check on the tenant yourself, it might be worth investing in just one to save on interest and closing costs over time.

Look into the Cooperative Model

Another attractive alternative for those who don’t have a down payment is to invest in co-ops or properties owned by a nonprofit organization and leased to the tenants as part of their membership fee.

Some organizations require as little as a $250 annual membership fee, while others require a more significant investment. But either way, the fees mean that many of these properties can be purchased without a down payment or with very few dollars saved up.

With every closing, ask your lender about the different options available to you for financing without a down payment. You might luck out and find someone who will offer an FHA loan or another 100 percent financing option. If not, just keep in mind that you have plenty of other options for how to invest in real estate without putting your cash down, so you can pursue the path that works best for your needs.


If you want to start investing in real estate but don’t have the cash for a down payment, there are two possible options. You can either save up enough money or ask someone else who has that kind of capital to lend it to you with an agreement where both parties share ownership and the profits. 

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